Estimating Market Power of U.S. Dairy Cooperatives in the Fluid Milk Market
AbstractA structural econometric model of vertical relationships is adopted to identify pricing behavior in the supply chain for fluid milk in the United States. The model consists of a system of equations that allows estimation of oligopoly power of dairy co-operatives and downstream firms, exploiting federal milk marketing order regulations to identify co-operatives' marginal cost. A key finding is that co-operatives use their market power to raise the farm price of milk by almost 9% above marginal cost, resulting in an income transfer of more than $600 million per year in markets regulated by federal milk marketing orders. Copyright 2012, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 94 (2012)
Issue (Month): 3 ()
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- Cai, Xiaowei & Stiegert, Kyle W., 2012. "Economic Analysis of the U.S. Fluid Milk Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124939, Agricultural and Applied Economics Association.
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