Space-Product Equilibrium in the Dairy Industry of the Northeastern and North Central Regions

D. A. West and G. E. Brandow

American Journal of Agricultural Economics, 1964, vol. 46, issue 4, 719-731

Abstract: The broad impact of the removal of all institutional barriers to the production and movement of fluid milk on the dairy industry of the Northeastern and North Central regions is examined. Competitive equilibrium patterns of milk production, utilization, prices, and shipments are obtained by estimating supply and demand functions for various areas of the nation and relating prices in the areas by transfer costs for fluid and manufactured milk. The effects of alternative estimates of some key variables are studied. All equilibrium solutions show a decline in Class I prices in the Northeast, a general increase in manufacturing milk prices, and some shift of production from the Northeast to the Lake States. These results are modified only a little by introducing a hypothetical fresh milk concentrate. Some implications for price policy are discussed.

Date: 1964
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