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Efficiency losses in milk marketing boards - the importance of exports

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  • Rolf Jens Brunstad
  • Ivar Gaasland
  • Erling Vårdal

Abstract

A milk marketing board (MMB) is a well known instrument for regulating the markets for dairy products. MMBs are based on price discrimination, and receipts from sales are pooled so that the farmers receive a single price adjusted for composition and quality. Using a numerical model, we find that the economic welfare cost of the Norwegian MMB, is as much as 26.3% of the milk production value. This computed cost is far larger than for the other countries with MMBs. The main reasons are that exports are a major ingredient of the Norwegian system, and that production costs are very high

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Bibliographic Info

Article provided by Nordic Journal of Political Economy in its journal Nordic Journal of Political Economy.

Volume (Year): 31 (2005)
Issue (Month): ()
Pages: 77-97

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Handle: RePEc:noj:journl:v:31:y:2005:p:77-97

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Web page: http://www.nopecjournal.org

Related research

Keywords: Milk marketing boards; Norwegian dairy policy; price discrimination;

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  1. Spreen, Thomas H., 2006. "Price Endogenous Mathematical Programming Models and Trade Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(02), August.
  2. Porter, Philip K & Scully, Gerald W, 1987. "Economic Efficiency in Cooperatives," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 489-512, October.
  3. Tsunemasa Kawaguchi & Nobuhiro Suzuki & Harry M. Kaiser, 1997. "A Spatial Equilibrium Model for Imperfectly Competitive Milk Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 851-859.
  4. Mats Bergman, 1997. "Antitrust, Marketing Cooperatives, and Market Power," European Journal of Law and Economics, Springer, vol. 4(1), pages 73-92, January.
  5. Andrew Schmitz, 1983. "Supply Management in Canadian Agriculture: An Assessment of the Economic Effects," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 31(2), pages 135-152, 07.
  6. Brunstad, Rolf Jens & Gaasland, Ivar & Vardal, Erling, 1995. "Agriculture as a provider of public goods: a case study for Norway," Agricultural Economics, Blackwell, vol. 13(1), pages 39-49, October.
  7. Helmberger, Peter G. & Chen, Yu-Hui, 1994. "Economic Effects Of U.S. Dairy Programs," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(02), December.
  8. Berit Tennbakk, 1995. "Marketing Cooperatives In Mixed Duopolies," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 33-45.
  9. Freebairn, John W., 1992. "Dairy Industry Policy," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 60(01), April.
  10. Ippolito, Richard A & Masson, Robert T, 1978. "The Social Cost of Government Regulation of Milk," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 33-65, April.
  11. Thomas L. Cox & Jean-Paul Chavas, 2001. "An Interregional Analysis of Price Discrimination and Domestic Policy Reform in the U.S. Dairy Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 89-106.
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