The Impact of Price Regulations on Farm-Retail Price Transmission: The Case of Fluid Milk

Adam Rabinowitz, Yizao Liu and Xuan Chen

No 230095, 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas from Southern Agricultural Economics Association

Abstract: This article analyzes the impact of federal and state milk pricing regulations on cost past through in the U.S. fluid milk market. Producer pricing in the fluid milk market is regulated by federal and/or state milk marketing regulations while the retailer price is influenced in some geographic locations by state regulations ranging from minimum to maximum pricing policies. The regulation either aims to support local dairy farmers or protect consumers from price gouging, either of which could also affect the response of retail milk prices to farm price changes. We use monthly state-level retail milk pricing data across the US from 2006 to 2011 to estimate the nonreversible function of farm-retail price transmission using the Houck (1977) procedure. Specifically, our model includes increasing and decreasing accumulated farm price changes with an expansion to include interaction terms of pricing regulations. This modeling approach allows us to explore the influences of price regulations on the farm-retail price transmission. The results indicate that pricing regulations have a significant influence on price transmission, regardless of the type of regulation. Minimum price laws have the strongest mitigation power of the asymmetries in farm-retail price transmission, while a maximum price law has an amplifying effect.

Keywords: Agribusiness; Agricultural and Food Policy (search for similar items in EconPapers)
Pages: 25
Date: 2016-01-22
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/230095/files/R ... en%20SAEA%202016.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:saea16:230095

DOI: 10.22004/ag.econ.230095

Access Statistics for this paper

More papers in 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas from Southern Agricultural Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().