2.1. Institutional detail
The US sugar manufacturing cartel was established under the New Deal in the Jones–Costigan Act of 1934 to limit sugar sales and restrict foreign sugar imports. Under the cartel plan, entry of firms into the sugar beet industry was prohibited. Existing sugar beet farmers were assigned an acreage quota based on pre-cartel planted acres that they could not exceed. Although it was illegal to sell the quota, it could be inherited by family members (Bridgman et al., 2009). Following an unexpected surge in world sugar consumption, sugar prices markedly increased during 1974 and political support for the cartel evaporated. The Act was not renewed and the cartel and its provisions ceased in 1975, permitting free entry into sugar beet farming (Corley, 1975). Whereas entry into the sugar beet industry was prohibited until 1975, free entry into corn farming was permitted during the entire sample period.