Retail Oligopoly Power, Dairy Compact, And Boston Milk Prices
This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid milk prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail milk price, translating into approximately a little less than $0.75/gallon. We also estimated that only around two-thirds of the raw milk price changes were passed forward to consumers. This helps explain why consumer prices have come down only little after elimination of the NEDC. In fact, the new milk income loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw milk prices that have generated substantial benefits to milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: 1376 Storrs Road, Unit 4021, Storrs, CT 06269-4021|
Phone: (860) 486-2836
Fax: (860) 486-1932
Web page: http://www.fmpc.uconn.edu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cotterill, Ronald W. & Dhar, Tirtha Pratim, 2003.
"Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel,"
25189, University of Connecticut, Food Marketing Policy Center.
- Ronald W. Cotterill & Tirtha Pratim Dhar, 2003. "Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel," Food Marketing Policy Center Research Reports 074, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
- MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983.
"Tests for model specification in the presence of alternative hypotheses : Some further results,"
Journal of Econometrics,
Elsevier, vol. 21(1), pages 53-70, January.
- Russell Davidson & James G. MacKinnon, 1981. "Tests for Model Specification in the Presence of Alternative Hypotheses: Some Further Results," Working Papers 430, Queen's University, Department of Economics.
- Junko Kinoshita & Nobuhiro Suzuki & Tamotsu Kawamura & Yasuhito Watanabe & Harry M. Kaiser, 2001. "Estimating own and cross brand price elasticities, and price-cost margin ratios using store-level daily scanner data," Agribusiness, John Wiley & Sons, Ltd., vol. 17(4), pages 515-525.
- Huang, Kuo S., 1985.
"U.S. Demand for Food: A Complete System of Price and Income Effects,"
157014, United States Department of Agriculture, Economic Research Service.
- Huang, Kuo S., 1985. "U.S Demand for Food: A Complete System of Price and Icome Effects," Technical Bulletins 206507, United States Department of Agriculture, Economic Research Service.
- Joseph V. Balagtas & Daniel A. Sumner, 2003. "The Effect of the Northeast Dairy Compact on Producers and Consumers, with Implications of Compact Contagion," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 123-144.
- Bonanno, Alessandro & Lopez, Rigoberto A., 2004.
"Private Labels, Retail Configuration, and Fluid Milk Prices,"
25222, University of Connecticut, Food Marketing Policy Center.
- Alessandro Bonanno & Rigoberto A. Lopez, 2004. "Private Labels, Retail Configuration, and Fluid Milk Prices," Food Marketing Policy Center Research Reports 082, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
- Johnson, Stanley R. & Stonehouse, D. Peter & Hassan, Zuhair A., 1992. "Market Demand for Dairy Products," Staff General Research Papers 575, Iowa State University, Department of Economics.
- Hoy F. Carman & Richard J. Sexton, 2005. "Supermarket fluid milk pricing practices in the western United States," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 509-530.
- Severin Borenstein & Stephen P. Holland, 2003.
"On the Efficiency of Competitive Electricity Markets With Time-Invariant Retail Prices,"
NBER Working Papers
9922, National Bureau of Economic Research, Inc.
- Severin Borenstein & Stephen Holland, 2005. "On the Efficiency of Competitive Electricity Markets with Time-Invariant Retail Prices," RAND Journal of Economics, The RAND Corporation, vol. 36(3), pages 469-493, Autumn.
- Rigoberto Lopez & Azzeddine Azzam & Carmen Lirón-España, 2002. "Market Power and/or Efficiency: A Structural Approach," Review of Industrial Organization, Springer, vol. 20(2), pages 115-126, March.
- Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
- Sexton, Richard J. & Lavoie, Nathalie, 2001. "Food processing and distribution: An industrial organization approach," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 15, pages 863-932 Elsevier.
- Narasimhan, Chakravarthi & Wilcox, Ronald T, 1998. "Private Labels and the Channel Relationship: A Cross-Category Analysis," The Journal of Business, University of Chicago Press, vol. 71(4), pages 573-600, October.
- Liu, Donald J. & Sun, Chin-Hwa & Kaiser, Harry M., 1995. "Market Conduct Under Government Price Intervention In The U.S. Dairy Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(02), December.
When requesting a correction, please mention this item's handle: RePEc:ags:uconnr:25212. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.