The Economics of Britain's Egg Shortage

Newsnight looks into the ongoing egg shortage in the UK and the impact of avian flu on the nation's birds - including poultry. Factor in rising costs because of higher energy and feed prices, and there's a national shortage. As a result, a number of supermarkets are rationing their availability to consumers.

This is a classic example of how supply-side factors feed through into markets - and ordinarily, markets would resolve this and the price of eggs would rise.

Geoff's comments:

It is also a good mini case study in power relationships between buyers and sellers in markets. The major supermarkets have significant monopsony power and many egg farmers argue that the supermarkets are not prepared to pay a better price to egg farmers to help them through their own financial crisis.

In response, Waitrose has committed to paying farmers an extra £2.6m to maintain egg supply.