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The Impact of Regulatory Change on Retail Pricing: The New York State Milk Price Gouging Law

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  • Rabinowitz, Adam N.
  • Liu, Yizao

Abstract

This study examines the causal effect of a change in administration of the New York State milk price gouging law on retail milk prices. Specifically, we focus on the November 2008 shift from a threshold pricing policy that consisted of monthly announced prices to a fixed margin policy. Using a regression discontinuity approach, we find lower prices and thus increased consumer welfare for retail milk purchasers in New York State. Furthermore, the change in application of the law may have eliminated previously hypothesized coordination in pricing by retailers through a more competitive retail milk environment.

Suggested Citation

  • Rabinowitz, Adam N. & Liu, Yizao, 2014. "The Impact of Regulatory Change on Retail Pricing: The New York State Milk Price Gouging Law," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(01), pages 1-15, April.
    • Handle: RePEc:ags:arerjl:165910
    DOI: 10.22004/ag.econ.165910
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    1. Hoy F. Carman & Richard J. Sexton, 2005. "Supermarket fluid milk pricing practices in the western United States," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 509-530.
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    5. Adam Rabinowitz & Ronald W. Cotterill, 2009. "The Need for New Milk Pricing Policies," Issue Papers 56, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    6. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers 1118, Princeton University, Department of Economics, Industrial Relations Section..
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    8. Robert Romain & Maurice Doyon & Mathieu Frigon, 2002. "Effects of state regulations on marketing margins and price transmission asymmetry: Evidence from the New York City and upstate New York fluid milk markets," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 301-315.
    9. Cotterill, Ronald W., 2006. "Pricing and Policy Problems in the Northeast Fluid Milk Industry," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(2), pages 1-12, October.
    10. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
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    12. Antonio Bento & Daniel Kaffine & Kevin Roth & Matthew Zaragoza-Watkins, 2014. "The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector," American Economic Journal: Economic Policy, American Economic Association, vol. 6(3), pages 1-29, August.
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    Cited by:

    1. Piotr Bórawski & Adam Pawlewicz & Andrzej Parzonko & Jayson, K. Harper & Lisa Holden, 2020. "Factors Shaping Cow’s Milk Production in the EU," Sustainability, MDPI, vol. 12(1), pages 1-15, January.
    2. Yizao Liu & Adam N. Rabinowitz, 2021. "The impact of the COVID‐19 pandemic on retail dairy prices," Agribusiness, John Wiley & Sons, Ltd., vol. 37(1), pages 108-121, January.

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