Unintended Competition from Volume Controls: A Note on the Horne v. Department of Agriculture Decision
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Jason Winfree
Abstract
The U.S. Supreme Court case, Horne v. Department of Agriculture, dealt with the legality of volume controls in the raisin industry. Marketing orders and volume controls in agricultural markets have a long history in the United States and have often been used to decrease price volatility. However, some have seen these volume controls as engaging in cartel behavior. Using a Cournot model, this paper shows that volume controls used by agricultural marketing orders can be profit reducing under some conditions. If producers anticipate a restriction in the production that is allowed to go into the market on a prorated basis, initial production may increase, which can lower profits. Counter intuitively, volume controls can even increase the quantity sold in the market and lower the price.
Acknowledgments
Funding for this research project was provided, in part, by the Idaho Agricultural Experiment Station and the USDA-NIFA. I would like to thank Richard Sexton and referees for helpful comments.
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Articles in the same Issue
- Frontmatter
- Research Articles
- Animal Welfare Ballot Initiatives and the Vote-Buy Gap
- A Conjectural Variations Approach to Detecting Collusion: The Broiler Chicken Antitrust Litigation Case
- Collusion and Price Behavior in the U.S. Pork Industry
- Price Connectedness in the Futures Markets of Livestock Commodities
- Unintended Competition from Volume Controls: A Note on the Horne v. Department of Agriculture Decision
- A Theoretical Assessment of Informal Agricultural Cooperation Under Distrust: Implications from a Network Perspective
Articles in the same Issue
- Frontmatter
- Research Articles
- Animal Welfare Ballot Initiatives and the Vote-Buy Gap
- A Conjectural Variations Approach to Detecting Collusion: The Broiler Chicken Antitrust Litigation Case
- Collusion and Price Behavior in the U.S. Pork Industry
- Price Connectedness in the Futures Markets of Livestock Commodities
- Unintended Competition from Volume Controls: A Note on the Horne v. Department of Agriculture Decision
- A Theoretical Assessment of Informal Agricultural Cooperation Under Distrust: Implications from a Network Perspective
