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Economic Analysis of the U.S. Fluid Milk Industry

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  • Cai, Xiaowei
  • Stiegert, Kyle W.

Abstract

In the literature, mixed results have been obtained from the studies that have examined the market power of dairy cooperatives and processors. As the main objective of the present work, we intend to find further empirical evidence to investigate whether the dairy cooperatives’ oligopoly power that is implicit in the dynamic pricing games exists and how it influences the beverage milk margins from 1983 to 2012. We studied three regional markets: California, New York and Wisconsin. In all regions, we found clear evidence of alternating high- and low-margin regimes during the study years which indicates slight departures from perfect competition in the U.S. fluid milk market. But the levels of departure vary across different states.

Suggested Citation

  • Cai, Xiaowei & Stiegert, Kyle W., 2012. "Economic Analysis of the U.S. Fluid Milk Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124939, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea12:124939
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    References listed on IDEAS

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    2. Xiaowei Cai & Kyle Stiegert & Stephen Koontz, 2011. "Regime switching and oligopsony power: the case of U.S. beef processing," Agricultural Economics, International Association of Agricultural Economists, vol. 42(1), pages 99-109, January.
    3. Hayley H. Chouinard & David E. Davis & Jeffrey T. LaFrance & Jeffrey M. Perloff, 2010. "Milk Marketing Order Winners and Losers," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 59-76.
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    6. 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.
    7. Metin Cakir & Joseph V. Balagtas, 2012. "Estimating Market Power of U.S. Dairy Cooperatives in the Fluid Milk Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 647-658.
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    More about this item

    Keywords

    Dairy Cooperatives; Fluid Milk; Margins; Milk Marketing Order; Agribusiness; Q13; Q18; L13; L20;

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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