Milk Marketing Order Winners and Losers
Determining the impacts on consumers of government policies affecting the demand for
food products requires a theoretically consistent micro-level demand model. We estimate
a system of demands for weekly city-level dairy product purchases by nonlinear three
stage least squares to account for joint determination between quantities and prices. We
analyze the distributional effects of federal milk marketing orders, and find results that
vary substantially across demographic groups. Families with young children suffer, while
wealthier childless couples benefit. We also find that households with lower incomes
bear a greater regulatory burden due to marketing orders than those with higher income
levels.