What are the costs and difficulties of such an operation, Microeconomics

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What are the costs and difficulties of such an operation?

The direct costs are administrative, cooperative and storage costs, whereas the societal costs include misallocation, oversupply and waste. Buffer stocks have been increasingly abandoned for a number of reasons, mainly dealing with costs, political pressure, large unwanted stocks and enhancing criticism of the bad incentive effect perpetuating oversupply of goods.

 


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