Optimum Dairy Plant Location with Economies of Size and Market-Share Restrictions

Donald W. Kloth and Leo V. Blakley

American Journal of Agricultural Economics, 1971, vol. 53, issue 3, 461-466

Abstract: Significant economies are possible under optimum organizations of the U. S. dairy industry, but models that minimize industry costs with a single firm in each market overestimate the potential savings. The effects of market-share restrictions for processing firms are estimated. Costs are higher than under single-firm organizations but remain below levels for the current plant-size environment. The major interregional effect of the restrictions is on the regional identity of the firms processing milk for local markets, not on the total quantity of milk transported between regions. With market-share restrictions, more milk is processed locally.

Date: 1971
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