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Unintended Competition from Volume Controls: A Note on the Horne v. Department of Agriculture Decision

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  • Winfree Jason

    (Agricultural Economics and Rural Sociology, University of Idaho, 875 Perimeter Drive MS 2334, 83844, Moscow, ID, USA)

Abstract

The U.S. Supreme Court case, Horne v. Department of Agriculture, dealt with the legality of volume controls in the raisin industry. Marketing orders and volume controls in agricultural markets have a long history in the United States and have often been used to decrease price volatility. However, some have seen these volume controls as engaging in cartel behavior. Using a Cournot model, this paper shows that volume controls used by agricultural marketing orders can be profit reducing under some conditions. If producers anticipate a restriction in the production that is allowed to go into the market on a prorated basis, initial production may increase, which can lower profits. Counter intuitively, volume controls can even increase the quantity sold in the market and lower the price.

Suggested Citation

  • Winfree Jason, 2025. "Unintended Competition from Volume Controls: A Note on the Horne v. Department of Agriculture Decision," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 23(1), pages 59-64.
    • Handle: RePEc:bpj:bjafio:v:23:y:2025:i:1:p:59-64:n:1001
    DOI: 10.1515/jafio-2023-0062
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    More about this item

    Keywords

    marketing orders; volume controls; Cournot; cartels;
    All these keywords.

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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