Publication Date:Jan 01, 2004 Discipline:Business & Government
Relations Source:Kellogg School of Management Also Available in:
Since 1981, the U.S. federal government has operated a price
support program to help sugar beet and sugar cane producers and
processors. This complex program works through a combination of
loans, import quotas, and duties. As a result, sugar prices in
the United States are significantly higher than world prices.
For example, in December 2001, U.S. consumers paid 22.9 cents
per pound, while the world price was just 9 cents per pound. The
General Accounting Office estimates that the total cost to
consumers is $1.9 billion a year. Uses a simple demand-and-
supply framework with real-world data to assess the economic and
political consequences of the U.S. sugar program. To illustrate
welfare concepts such as consumer surplus, producer surplus, and
dead-weight loss in a concrete, real-world market context.
Business & government relations; Economy; Government policy;
Prices; Subsidies; Supp