Quote from: uxgpf on September 14, 2015, 06:16:41 PM

Quote from: Peter R on September 14, 2015, 06:06:55 PM

If the market wants to be at Q*, but the production quota is forcing it to be at Q_max, what can a group do to continue to enforce the production quota against the will of the market? How can the invisible hand be restrained?

If deadweight loss becomes large enough it forms a majority that will change the protocol as needed.
If not then it will probably exit the market.

My feeling is that if deadweight loss exists, then by definition the economic majority wants a change to the protocol. My hunch is that as the area shaded brown increases, it just exerts more and more pressure until there is a "dam breaking" event and the protocol forks. It is sort of like a phase change in physics (it takes a certain amount of "latent heat" to produce the change).

(Of course it is difficult to know for sure on which side of the equilibrium point the quota (Q_max) is sitting.)