Federal milk market regulation sets the wholesale price of most fluid milk in this country. This paper explores the purposes served by price-setting procedures under regulation and their quantitative impact. The institutional and theoretical background is provided, and an econometric model of a regulated milk market is estimated. The latter demonstrates that actual prices are consistent with those which would maximize producer benefit in 1960 and 1970, and that regulation produces quite substantial effects on prices and quantities within markets, on price patterns among markets, and on income distribution and economic efficiency.
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John E. Kwoka (1977) studied this question.
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