ABSTRACT
Government can exert an important impact on private price formation through its spending programs. Commissioned by the Congressional Joint Economic Committee, this chapter is a comprehensive examination of the wide array of government programs that affect the private economy. It analyzes the various mechanisms through which federal government programs affect the costs of business firms, the demand for their goods and services, and the prices they charge. The farm price support program is a government spending program with accompanying regulatory features. Under the Defense Production Act and related legislation, the government supports the prices of a number of minerals as a means of encouraging domestic development. In addition to affecting the costs of the private purchasers of goods and services from the government, governmental pricing policies may influence the pricing policies of private firms producing the same or similar goods and services.
