The Economics of Bargaining Power

Abstract

In Chap. 5we visited the troubled world of coffee, where growers are suffering from declining incomes and the economies of whole countries are at risk. We saw that prices fell after a supply management system was ended in 1989, and that recent increases in production capacity, combined with inelastic demand, has caused the bottom to fall out of the market. This gave us an example of the power of supply and demand analysis to explain important developments in economic and social life.