ABSTRACT
Swedish agricultural price policy during most of the postwar period has been of the so-called high-price variety, i.e. agricultural producers have been protected by (mainly) tariffs. The situation which has prevailed is illustrated in Figure 10. 1. Agricultural goods
Figure 10.1 Swedish agricultural policy during the postwar period
There, the Swedish economy has been divided into two sectors: agriculture and manufacturing (the rest of the economy). Free trade at international prices ( Pr ) would have resulted in production at point A on the production possibility curve and consumption at point B. (Sweden exports ‘manufactures’ and im ports ‘agricultural goods’.) However, this policy has not been followed. Instead a ‘high-price’ policy has been pursued, with tariff protection for agriculture. This, in Figure 10.1, amounts to production at C and consumption at D, at do mestic prices ( PD). This policy has lowered welfare, D being on a lower social indifference curve than B.
