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Orderly Marketing in Agriculture Revisited

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  • Leathers, Howard D.

Abstract

This paper presents a model of economic behavior that explicates the phenomenon known as “orderly marketing,” which was a main objective of the Marketing Orders agricultural program introduced early in the New Deal. Recent analyses of marketing orders start with an implicit assumption that there is no market failure—thus, that price regulation can cause only deviations from the first-best market solution. However, historical evidence suggests that disorderly marketing might refer to a kind of market imperfection. In the model presented here, a monopsonist processor sets a price to be paid, and an aggregate quantity to be purchased. In some states of the world, some farmers are excluded from the market. In other words, nonprice rationing can occur, and changes in consumer expenditure for the final product are absorbed by the processor rather than passed along to the farmer. The classified price and pooling provisions of federal orders can lead to a Pareto improvement in welfare.

Suggested Citation

  • Leathers, Howard D., 2007. "Orderly Marketing in Agriculture Revisited," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), pages 1-12, October.
  • Handle: RePEc:ags:arerjl:44703
    DOI: 10.22004/ag.econ.44703
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    References listed on IDEAS

    as
    1. Samuel Herman, 1937. "Orderly Marketing in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 45(3), pages 394-394.
    2. W. D. Dobson & Larry E. Salathe, 1979. "The Effects of Federal Milk Orders on the Economic Performance of U.S. Milk Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 213-227.
    3. repec:ucp:bknber:9780226301105 is not listed on IDEAS
    4. Elizabeth Hoffman & Gary D. Libecap, 1994. "Political Bargaining and Cartelization in the New Deal: Orange Marketing Orders," NBER Chapters, in: The Regulated Economy: A Historical Approach to Political Economy, pages 189-222, National Bureau of Economic Research, Inc.
    5. Gordon C. Rausser, 1992. "Predatory versus Productive Government: The Case of U.S. Agricultural Policies," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 133-157, Summer.
    6. Claudia Goldin & Gary D. Libecap, 1994. "Introduction to "The Regulated Economy: A Historical Approach to Political Economy"," NBER Chapters, in: The Regulated Economy: A Historical Approach to Political Economy, pages 1-12, National Bureau of Economic Research, Inc.
    7. Robert T. Masson & Philip M. Eisenstat, 1980. "Welfare Impacts of Milk Orders and the Antitrust Immunities for Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(2), pages 270-278.
    8. Helmberger, Peter G. & Chen, Yu-Hui, 1994. "Economic Effects Of U.S. Dairy Programs," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-14, December.
    9. F. B. Garver & Harry Trelogan, 1936. "The Agricultural Adjustment Act and the Reports of the Brookings Institution," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 50(4), pages 594-621.
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