Distortion of international trade by minimum pricing regulations and other measures to regulate domestic prices

Protection and commodity price support by governments have resulted in widely divergent producer prices in different countries. Although this intervention has brought stability to national markets, it tends to hinder the process of adjustment to supply and demand. The policy decisions of official agencies will often be widely different from the responses of producers, traders, and consumers in a free economy. Import demand is rendered less sensitive to offers. Exporting countries are strongly motivated to protect their producers from serious price falls in the international market.