Price Fixing: A Microeconomic Comparative Assessment Between Canadian Cartel Bread Industry and Supply-Managed Dairy Industry

Disclaimer

This paper was produced in MGEC02 (Summer 2025) under the instruction of Prof. Ata Mazaheri.
It is intended for academic purposes only. Any form of plagiarism is strictly prohibited.

Abstract

This paper compares two distinct cases of price coordination in Canada: private cartel activity in the bread industry and government-sanctioned supply management in the dairy sector. While “bread cartel’s dominant pricing is trivial compared to legalized dairy control”, we argue that the dairy market demonstrates a political inevitability rooted in repeated game dynamics between government and farmers. We show that the current structure of dairy supply management is a stable political equilibrium, resistant to policy removal, while bread cartels operate as unstable and unlawful market distortions. Through game-theoretic modeling, welfare analysis, and evidence from Canadian policy, we conclude that dairy supply management, though legal, causes greater long-run harm to innovation, consumer surplus, and efficiency than private bread cartels.

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