Toward Market Equilibrium?

Clearly all market economies provide for a certain amount of public intervention and are therefore defined as mixed economies. Whether they are adopted at international or local level, public policies are powerful instruments capable of generating both positive and negative effects on the system as a whole. Agricultural policy literature from authors such as Gardner (1987), Alston et al. (1990, 2002), and De Gorter et al. (1991) has demonstrated that when the market is uncertain, prices are fluctuating and income is unstable, adopting certain agricultural policies can attenuate the negative effects to different extents. Although neoclassical economic theory shows that in the long term liberalist policies are preferable to interventionist policies, the reality of the public support facet of agricultural policy demonstrates the exact opposite. Liberalism has political and social costs, which can prove to be very costly in the short term. There are different types of impact that public intervention can have on the agricultural sector. It can affect production and consumption structures through rules, standards, and institutions that regulate agricultural production, trade, and even consumption across the world. Public intervention regulations have taken several different forms and have helped to attenuate volatility on the market.