MONOPOLY ANALYSIS

Monopoly Analysis

Monopoly Analysis

I: At the North-East [Interstate] Dairy Compact is an interstate compact created in the New England states and approved by Congress, which was to regulate the wholesale prices for fluid milk in Member States, and to take other measures to preserve the economic efficiency of dairy farming in the region. The compact created the Northeast Dairy Compact Commission, based in Montpelier, Vermont, are charged with establishing and regulating prices for the bulk of the milk trucks. After the disputes and claims of price in 1999, Congress limited the term of its permit for the compact, which ceased operations on 30 September 2001, after intensive lobbying in favor of and against its extension.

II: Mission

Interest grew in the establishment of the Southern Dairy Compact among the 15 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia. The purpose of the Southern Dairy Compact (Louisiana Department of Agriculture and Forestry):

. . . recognize the interstate nature of the southern dairy industry and the prerogative of the States in accordance with the Constitution of the United States to establish an Interstate Commission for the Southern region. The Commission's task is to take such steps as are necessary to ensure the future viability of dairy farming in the south, and to ensure consumers an adequate, local supply of clean and good milk (www.dairycompact.org).

III: Price regulation

How Compact work?

First, the treaty commission is formed. The Commission then corrects the liquid milk price above the minimum federal order price in a compact area (class 1 price).

What is the contract price?

These prices are announced in the treaty commission on all sales of fluid milk in the compact area. This is essentially creates a "price floor" for all liquid milk sales in a compact area. In the north-eastern part of the contract, the Commission has kept compact price of $ 16.94 per CWT, but has the right to change it.

With the Compact Premium?

This is the monthly difference between the price of a compact and a federal order Class 1 price. From 1st class, the price changes every month, the compact premium is also expected to change every month.

Location Premium Compact Come From?

Processors pay compact premium to the contract committee, as well as to pay administrative costs of running the program. These direct costs are transferred to consumers. Therefore, in the end, consumers pay a large ...