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Welfare Costs and Interregional Income Transfers Due to Regulation of Dairy Markets
Author(s) -
Dahlgran Roger A.
Publication year - 1980
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1239702
Subject(s) - citation , state (computer science) , position (finance) , welfare state , welfare , library science , economics , political science , computer science , law , finance , algorithm , politics
The U.S. dairy industry is claimed to be unique in that it is subject to more regulation than any other agricultural industry (Hallberg and Fallert, p. 3). Whether the dairy industry is subject to more or less regulation than any other particular agricultural industry is not important. For our purposes, it is sufficient only to agree that the dairy industry is highly regulated. It is the purpose of this paper to formulate a model and estimate the interregional transfers and welfare losses created by the current regulatory structure imposed on U.S. dairy markets. Given the degree of dairy market regulation, it would be useful to summarize the regulation that is unique to dairying. Sanitary grading was established by regulation to differentiate raw milk by its quality or condition of production. Grade A milk is produced under the strictest sanitary conditions and is eligible for fluid, or beverage, consumption. Grade B milk is produced under less strict sanitary conditions and is eligible only to be incorporated into manufactured dairy products such as cheese and butter.