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Milk Marketing Order Winners and Losers

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

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. Based on these estimates, we simulate substitution effects 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. Families with young children suffer from marketing orders, while wealthier childless couples benefit. Additionally, we find that households with lower incomes pay a larger percentage of their income due to marketing orders than those with higher income levels.

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File URL: http://purl.umn.edu/21238
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21238.

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Date of creation: 2006
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Handle: RePEc:ags:aaea06:21238
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  1. 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.
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  9. LaFrance, Jeffrey T. & Beatty, Timothy K. M. & Pope, Rulon D., 2004. "Building Gorman's Nest," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2ws698td, Department of Agricultural & Resource Economics, UC Berkeley.
  10. 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.
  11. 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.
  12. Huang, Kuo S. & Lin, Biing-Hwan, 2000. "Estimation of Food Demand Nutrient Elasticities from household Survey Data," Technical Bulletins 184370, United States Department of Agriculture, Economic Research Service.
  13. 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.
  14. 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.
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  16. 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.
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  24. repec:cdl:agrebk:623332 is not listed on IDEAS
  25. Jeffrey T. LaFrance, 1993. "Weak Separability in Applied Welfare Analysis," Monash Economics Working Papers archive-26, Monash University, Department of Economics.
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  28. 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.
  29. LaFrance, Jeffrey T., 2004. "Integrability of the linear approximate almost ideal demand system," Economics Letters, Elsevier, vol. 84(3), pages 297-303, September.
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