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An Analysis of Retail Fluid Milk Pricing in the Eastern United States

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  • Bolotova, Yuliya V.

Abstract

In 2008 and 2009 dairy farmers in the U.S. Southeast and Northeast regions filed class action antitrust lawsuits, in which they alleged that Dean Foods, the largest fluid milk processor in the country, and Dairy Farmers of America, the largest dairy cooperative in the country, engaged in anticompetitive conduct, which restricted competition in the fluid milk market in these regions. This research analyzes the performance of fluid milk channel during the period affected by the alleged anticompetitive conduct and the period of antitrust actions in eight cities located in the affected regions. The empirical analysis reveals differences in the behavior of retail fluid whole milk prices, farm milk prices (Class I milk prices) and farm-to-retail margins during the two analyzed periods. There is empirical evidence indicating that increases in farm milk prices (Class I milk prices) are much higher in magnitude than increases in retail fluid whole milk prices, and farm-to-retail margins are lower in the antitrust action period. Furthermore, the vertical price transmission process (cost pass-through) and retail fluid milk pricing practices are different in the two analyzed periods in seven out of eight cities.

Suggested Citation

  • Bolotova, Yuliya V., 2017. "An Analysis of Retail Fluid Milk Pricing in the Eastern United States," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252744, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea17:252744
    DOI: 10.22004/ag.econ.252744
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    References listed on IDEAS

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    5. Lass, Daniel A. & Adanu, Mawunyo & Allen, P. Geoffrey, 2001. "Impacts Of The Northeast Dairy Compact On New England Retail Prices," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 30(1), pages 1-10, April.
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    7. Daniel Lass, 2005. "Asymmetric Response of Retail Milk Prices in the Northeast Revisited," Food Marketing Policy Center Research Reports 092, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
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    13. Yuliya V. Bolotova & Andrew M. Novakovic, 2012. "The Impact of the New York State Milk Price Gouging Law on the Price Transmission Process and Supermarket Pricing Strategies in the Fluid Whole Milk Market," Agribusiness, John Wiley & Sons, Ltd., vol. 28(4), pages 377-399, September.
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    Keywords

    Agribusiness; Agricultural and Food Policy; Demand and Price Analysis; Industrial Organization; Marketing;
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