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Milk Marketing Order Winners and Losers

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  • Chouinard, Hayley H.
  • Davis, David E.
  • LaFrance, Jeffrey T.
  • Perloff, Jeffrey M

Abstract

Do milk marketing orders affect various demographic groups differently? To answer this question, we use supermarket scanner data to estimate an incomplete demand system for dairy products. We use these estimates to simulate substitution among dairy products and the welfare impacts of price changes resulting from changes in milk marketing orders for various consumer groups. While we find little difference in own- and cross-price substitution elasticities of demand, the welfare effects of price changes vary substantially across demographic groups, with some losing and others winning from this government program.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt82q751hf.

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Date of creation: 01 Aug 2005
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Handle: RePEc:cdl:agrebk:qt82q751hf

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Keywords: marketing orders; milk; milk pricing; price elasticity;

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References

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  1. Jeffrey T. LaFrance & W. Michael Hanemann, 1989. "The Dual Structure of Incomplete Demand Systems," Development Research Unit Working Paper Series archive-21, Monash University, Department of Economics.
  2. LaFrance, Jeffrey T., 2004. "Integrability of the linear approximate almost ideal demand system," Economics Letters, Elsevier, vol. 84(3), pages 297-303, September.
  3. Cotterill, Ronald W., 2003. "The Impact of the Northeastern Dairy Compact on New England Consumers: A Report from the Milk Policy Wars," Research Reports 25171, University of Connecticut, Food Marketing Policy Center.
  4. 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.
  5. 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.
  6. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-30, June.
  7. Tsunemasa Kawaguchi & Nobuhiro Suzuki & Harry M. Kaiser, 2001. "Evaluating class I differentials in the new federal milk marketing order system," Agribusiness, John Wiley & Sons, Ltd., vol. 17(4), pages 527-538.
  8. Jeffrey T. LaFrance & Harry D. Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," Development Research Unit Working Paper Series archive-34, Monash University, Department of Economics.
  9. Attfield, C. L. F., 1991. "Estimation and testing when explanatory variables are endogenous : An application to a demand system," Journal of Econometrics, Elsevier, vol. 48(3), pages 395-408, June.
  10. Rulon D. Pope & Jeffrey T. LaFrance & Timothy K. M.Beatty, 2004. "Building Gorman's Nest," Econometric Society 2004 Australasian Meetings 26, Econometric Society.
  11. Berck, Peter & Perloff, Jeffrey M, 1984. "A Dynamic Analysis of Marketing Orders, Voting , and Welfare," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt3d09786w, Department of Agricultural & Resource Economics, UC Berkeley.
  12. Blaylock, James R. & Smallwood, David M., 1983. "Effects of Household Socioeconomic Features on Dairy Purchases," Technical Bulletins 157654, United States Department of Agriculture, Economic Research Service.
  13. Jeffrey T. LaFrance, 1993. "Weak Separability in Applied Welfare Analysis," Development Research Unit Working Paper Series archive-26, Monash University, Department of Economics.
  14. John L. Park & Rodney B. Holcomb & Kellie Curry Raper & Oral Capps, 1996. "A Demand Systems Analysis of Food Commodities by U.S. Households Segmented by Income," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 290-300.
  15. Wales, T. J. & Woodland, A. D., 1983. "Estimation of consumer demand systems with binding non-negativity constraints," Journal of Econometrics, Elsevier, vol. 21(3), pages 263-285, April.
  16. Huang, Kuo S. & Lin, Biing-Hwan, 2000. "Estimation Of Food Demand And Nutrient Elasticities From Household Survey Data," Technical Bulletins 33579, United States Department of Agriculture, Economic Research Service.
  17. Jeffrey T. LaFrance, 1990. "Incomplete Demand Systems And Semilogarithmic Demand Models," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 34(2), pages 118-131, 08.
  18. Attfield, Clifford L. F., 1985. "Homogeneity and endogeneity in systems of demand equations," Journal of Econometrics, Elsevier, vol. 27(2), pages 197-209, February.
  19. Bergtold, Jason S. & Akobundu, Eberechukwu & Peterson, Everett B., 2004. "The FAST Method: Estimating Unconditional Demand Elasticities for Processed Foods in the Presence of Fixed Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(02), August.
  20. Deaton, Angus, 1986. "Demand analysis," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 30, pages 1767-1839 Elsevier.
  21. repec:cdl:agrebk:623332 is not listed on IDEAS
  22. LaFrance, Jeffrey T., 1991. "When Is Expenditure "Exogenous" In Separable Demand Models?," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(01), July.
  23. LaFrance, Jeffrey T., 2008. "The structure of US food demand," Journal of Econometrics, Elsevier, vol. 147(2), pages 336-349, December.
  24. Heien, Dale & Wessells, Cathy Roheim, 1990. "Demand Systems Estimation with Microdata: A Censored Regression Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 365-71, July.
  25. Jensen, Kimberly L., 1995. "Fluid Milk Purchase Patterns In The South: Effects Of Use Of Nutrition Information And Household Characteristics," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(02), December.
  26. Jeffrey T. LaFrance, 1991. "Consumer's surplus versus compensating variation revisited," Development Research Unit Working Paper Series archive-35, Monash University, Department of Economics.
  27. Gould, Brian W. & Cox, Thomas L. & Perali, Carlo Federico, 1990. "The Demand For Fluid Milk Products In The U.S.: A Demand Systems Approach," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(01), July.
  28. LaFrance, Jeffrey T., 1985. "Linear demand functions in theory and practice," Journal of Economic Theory, Elsevier, vol. 37(1), pages 147-166, October.
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Citations

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Cited by:
  1. Davis, Christopher G. & Dong, Diansheng & Blayney, Donald P. & Yen, Steven T. & Stillman, Richard, 2012. "U.S. Fluid Milk Demand: A Disaggregated Approach," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 15(1).
  2. Miao, Zhen & Beghin, John C. & Jensen, Helen H., 2012. "Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity," Staff General Research Papers 32211, Iowa State University, Department of Economics.
  3. Davis, Chris & Blayney, Don & Yen, Steven & Cooper, Joseph C., 2009. "An analysis of at-home demand for ice cream in the United States," MPRA Paper 24782, University Library of Munich, Germany.
  4. Miao, Zhen & Beghin, John C. & Jensen, Helen H., 2011. "Taxing Sweets: Sweetener Input Tax or Final Consumption Tax?," Staff General Research Papers 32670, Iowa State University, Department of Economics.
  5. Borneman, Darand L. & Ingham, Steve, 2014. "Evaluating Wisconsin dairy producer compliance and potential eligibility for international markets under existing European Union and United States Grade “A” bulk tank somatic cell count compliance," Food Policy, Elsevier, vol. 46(C), pages 150-156.
  6. Davis, Christopher G. & Blayney, Donald P. & Muhammad, Andrew & Yen, Steven T. & Cooper, Joseph C., 2010. "A Cross-Sectional Analysis of U.S. Yogurt Demand," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(2), July.
  7. Wolf, Christopher A. & Tonsor, Glynn T., 2013. "Dairy Farmer Policy Preferences," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.
  8. 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.
  9. Berning, Joshua & Chouinard, Hayley & McCluskey, Jill, 2009. "Measuring the Impact of Nutrition Labels on Food Purchasing Decisions: A field experiment with scanner data," Research Reports 153338, University of Connecticut, Food Marketing Policy Center.

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