Excessive government purchases of dairy surpluses during the early 1980s prompted three corrective measures: the Milk Diversion Program, Dairy Termination Program, and lower support prices. An eight‐equation econometric model of the dairy sector simulates these programs and shows them to be incomplete or impermanent in their effects. However, further analysis shows that a more aggressive policy of lower support prices would be effective in reducing costs to government and consumers, and lowering transfers to producers.
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Bausell et al. (1992) studied this question.
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