This paper is the first to lay out in an explicit and consistent framework the quantitative effects of the Northeast Compact on producers and consumers. We model and measure the Northeast Compact’s effects on milk markets throughout the United States. Unlike previous studies, we model the FMMO pricing policy, which we use as our counter-factual scenario against which we measure the Compacts effects. Further, our welfare analysis considers not only producers and consumers within the Compact region, but those outside of the Compact region. This paper goes beyond the immediate effects of the current Compact to consider the potential welfare implications of “Compact contagion”. We also consider implications for FMMO cartel stability.

See PDF article here: The Effects of the Northeast Dairy Compact on Producers and Consumers, with Implications for Compact Contagion. Paper by Joseph V. Balagtas and Daniel A. Sumner published in the Spring/Fall 2003 volume of the Review of Agricultural Economics.