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Efficiency losses in milk marketing boards - the importance of exports

Author

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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

Suggested Citation

  • Rolf Jens Brunstad & Ivar Gaasland & Erling Vårdal, 2005. "Efficiency losses in milk marketing boards - the importance of exports," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 77-97.
  • Handle: RePEc:noj:journl:v:31:y:2005:p:77-97
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    References listed on IDEAS

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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. Brunstad, Rolf Jens & Gaasland, Ivar & Vardal, Erling, 1995. "Agriculture as a provider of public goods: a case study for Norway," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 13(1), October.
    3. 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.
    4. Freebairn, John W., 1992. "Dairy Industry Policy," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 60(01), April.
    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, July.
    6. 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.
    7. Mats Bergman, 1997. "Antitrust, Marketing Cooperatives, and Market Power," European Journal of Law and Economics, Springer, vol. 4(1), pages 73-92, January.
    8. Berit Tennbakk, 1995. "Marketing Cooperatives In Mixed Duopolies," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 33-45.
    9. 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.
    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. 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.
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    Cited by:

    1. Malikov, Emir, 2016. "Estimating Multi-Product Production Functions and Productivity using Control Functions," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235108, Agricultural and Applied Economics Association.
    2. repec:eee:agisys:v:157:y:2017:i:c:p:157-169 is not listed on IDEAS

    More about this item

    Keywords

    Milk marketing boards; Norwegian dairy policy; price discrimination;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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