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Effects of state regulations on marketing margins and price transmission asymmetry: Evidence from the New York City and upstate New York fluid milk markets

  • Robert Romain

    (Department of Economics of Agrifood and Consumer Sciences, Faculty of Food and Agriculture Science, Université Laval, Québec, Canada G1K 7P4. E-mail: robert.romain@eac.ulaval.ca, maurice.doyon@eac.ulaval.ca, mfrigon@dfc-plc.ca)

  • Maurice Doyon

    (Department of Economics of Agrifood and Consumer Sciences, Faculty of Food and Agriculture Science, Université Laval, Québec, Canada G1K 7P4. E-mail: robert.romain@eac.ulaval.ca, maurice.doyon@eac.ulaval.ca, mfrigon@dfc-plc.ca)

  • Mathieu Frigon

    (Department of Economics of Agrifood and Consumer Sciences, Faculty of Food and Agriculture Science, Université Laval, Québec, Canada G1K 7P4. E-mail: robert.romain@eac.ulaval.ca, maurice.doyon@eac.ulaval.ca, mfrigon@dfc-plc.ca)

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    A marketing margin model that allows testing for constant returns to scale technology and asymmetric marketing costs and farm price transmissions is proposed. Results indicate that a constant returns to scale technology cannot be rejected. During the period prior to the enactment of the price gouging law in June 1991 by the New York State Legislature, significant short-run and long-run asymmetries in both marketing costs and farm price transmissions were identified. After 1991, these asymmetries were no longer significant or were reduced substantially. Finally, the legislative change that occurred in 1987, allowing Farmland Dairies' entry into the New York City fluid milk market, contributed significantly to reducing marketing margins in the New York City fluid milk market. [EconLit Citations: D400, C300] © 2002 Wiley Periodicals, Inc.

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    File URL: http://hdl.handle.net/10.1002/agr.10019
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    Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

    Volume (Year): 18 (2002)
    Issue (Month): 3 ()
    Pages: 301-315

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    Handle: RePEc:wly:agribz:v:18:y:2002:i:3:p:301-315
    Contact details of provider: Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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    1. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
    2. Azzeddine M. Azzam, 1999. "Asymmetry and Rigidity in Farm-Retail Price Transmission," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 525-533.
    3. Faminow, Merle D. & Laubscher, J. M., 1991. "Empirical testing of alternative price spread models in the South African maize market," Agricultural Economics, Blackwell, vol. 6(1), pages 49-66, October.
    4. Griffith, G. R. & Piggott, N. E., 1994. "Asymmetry in beef, lamb and pork farm-retail price transmission in Australia," Agricultural Economics, Blackwell, vol. 10(3), pages 307-316, May.
    5. Wohlgenant, Michael K. & Mullen, John D., 1987. "Modeling The Farm-Retail Price Spread For Beef," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(02), December.
    6. Faminow, Merle D. & Laubscher, J. M., 1991. "Empirical testing of alternative price spread models in the South African maize market," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 6(1), October.
    7. Novakovic, Andrew M., 1991. "Price Formation and the Transmission of Prices Across Levels of Dairy Markets," Staff Papers 121381, Cornell University, Department of Applied Economics and Management.
    8. Daniel H. Pick & Jeffrey Karrenbrock & Hoy F. Carman, 1990. "Price asymmetry and marketing margin behavior: An example for California-Arizona citrus," Agribusiness, John Wiley & Sons, Ltd., vol. 6(1), pages 75-84.
    9. Ping Zhang & Stanley M. Fletcher & Dale H. Carley, 1995. "Peanut price transmission asymmetry in peanut butter," Agribusiness, John Wiley & Sons, Ltd., vol. 11(1), pages 13-20.
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