<blockquote>
<p>why don't farmers refuse to sell excess supply (for example, by burning excess food), to keep prices up?</p>
</blockquote>
<p>They <strong>do</strong> refuse to sell crops when prices are low.  In that case, they <strong>store</strong><sup>1</sup> their crops in silos (in the US and Canada, at least) until commodity prices rise.  That's when they sell.</p>
<p>Of course, sometimes prices don't rise, and at some point they have to sell anyway to pay debts due, buy seed for next year, etc.</p>
<p><sup>1</sup>Burn??  That stuff cost <em>money</em> to grow.  Money that's got to be paid back.  Even selling at a loss brings in <em>some</em> money.</p>

CC BY-SA 4.0
2023-06-13T15:50:55.667Z
2023-06-13T15:50:55.667Z
RonJohn
<p>That's because &quot;farmers&quot; as a collective is not a decision maker. Decisions, e.g. on how much food to burn, are made by <em>individual</em> farmers. Now an individual farmer, by her own decision, has only negligible influence on the market price. She simply cannot &quot;keep prices up&quot; on her own. Thus, each individual farmer has a strong incentive not to burn any food but to sell everything she produced. So everybody sells whatever they can, and the market price is low. Sadly for them (but luckily for consumers), the farmers are stuck in a sort of prisoner's dilemma.</p>

CC BY-SA 4.0
2023-06-13T12:03:43.287Z
2023-06-13T12:03:43.287Z
VARulle
<p>I'm reading Paul Samuelson's Economics (19th edition, 2009). In page 71, the Paradox of the Bumper Harvest is introduced. According to the paradox, an increase in food supply from a good harvest actually decreases total revenue for farmers. This happens because food is an inelastic good, so demand does not increase with supply in the same rate. If this is the case, why don't farmers refuse to sell excess supply (for example, by burning excess food), to keep prices up?</p>

<microeconomics><supply-and-demand><elasticity>
Why don't producers of goods with inelastic demand refuse to increase supply?
Guilherme Ferrão
# Why don't producers of goods with inelastic demand refuse to increase supply?

(Asked by: username_0 on 2023-06-13)

I'm reading Paul Samuelson's Economics (19th edition, 2009). In page 71, the Paradox of the Bumper Harvest is introduced. According to the paradox, an increase in food supply from a good harvest actually decreases total revenue for farmers. This happens because food is an inelastic good, so demand does not increase with supply in the same rate. If this is the case, why don't farmers refuse to sell excess supply (for example, by burning excess food), to keep prices up?

**Tags:** microeconomics, supply-and-demand, elasticity

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## 2 answers

### Answer by username_2 on 2023-06-13. Score: 2 | Accepted answer

That's because "farmers" as a collective is not a decision maker. Decisions, e.g. on how much food to burn, are made by *individual* farmers. Now an individual farmer, by her own decision, has only negligible influence on the market price. She simply cannot "keep prices up" on her own. Thus, each individual farmer has a strong incentive not to burn any food but to sell everything she produced. So everybody sells whatever they can, and the market price is low. Sadly for them (but luckily for consumers), the farmers are stuck in a sort of prisoner's dilemma.


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### Answer by username_1 on 2023-06-13. Score: 0

> why don't farmers refuse to sell excess supply (for example, by burning excess food), to keep prices up?

They **do** refuse to sell crops when prices are low. In that case, they **store**1 their crops in silos (in the US and Canada, at least) until commodity prices rise. That's when they sell.

Of course, sometimes prices don't rise, and at some point they have to sell anyway to pay debts due, buy seed for next year, etc.

1Burn?? That stuff cost *money* to grow. Money that's got to be paid back. Even selling at a loss brings in *some* money.


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