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What type of market are the Brazilian arabica coffee growers operating in?

The story states that good weather has resulted in an unexpectedly large crop, which we know will increase supply and reduce the market price for their coffee beans. If all of the farmers know that picking this large crop will guarantee them lower prices, why do they all not simply agree to pick only, say, half of their crop to keep the supply low and the price high? [Hint: Think about what you know from Oligopoly and game theory about each farmer's individual incentives and the difficulty of maintaining a collusion agreement.]
What type of market structure would each farmer like to convert to (considering the prices that fancy single-origin, we'll say farm-specific beans in this case, fetch)? Were the farmers able to move "upmarket", would the farmers be making an economic profit when they all reached long-run equilibrium?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9476085

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