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Quotas without Supply Control: Effects of Dairy Quota Policy in California

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  • Daniel A. Sumner
  • Christopher A. Wolf

Abstract

Unlike the federal milk marketing order system, California's system includes a milk quota program. Oddly, this quota restricts neither production nor marketing. In aggregate, the quota program leads to more milk production than a typical marketing quota, but less milk than blend pricing without the quota. The California program generates more producer surplus and smaller welfare losses than a federal-style program without quota. When class 1 milk sales expand, production expands less under the quota program than with blend pricing without a quota. Finally, increases in aggregate quota lower production because they lower the marginal price of milk facing producers. Copyright 1996, Oxford University Press.

Suggested Citation

  • Daniel A. Sumner & Christopher A. Wolf, 1996. "Quotas without Supply Control: Effects of Dairy Quota Policy in California," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 354-366.
    • Handle: RePEc:oup:ajagec:v:78:y:1996:i:2:p:354-366
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