L07Sep09.306

L07Sep09.306 - Lect 6: Monopoly on Farm Products FRE 306...

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Lect 6: Monopoly on Farm Products FRE 306
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Lec 6: Monopoly on Farm Products 2 Monopoly on Raw Material/Farm Products (Supply Management) This section is descriptive of the policy regime in Canada in dairy and poultry sectors Farm-level monopoly is legislated for these products How to analyze: Standard Analysis: This policy like a tax on system: retail price rises, volume declines, all others hurt except farmers Additional method to analyze dairy product prices: Apply farm retail P markup model to examine farm-retail margins Competitiveness of chain? (a) Export prices? (b) Groups fighting/cooperating within chain to compete w/ outsiders?
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Lec 6: Monopoly on Farm Products 3 Canada’s Supply Managemt Regime Unique to dairy and poultry sectors in Canada Farmers in these sectors have decided to manage their sector collectively as cartel Farmers appeal to fed. government agency w/ support of provinces to institute such an agreement; legislation permits it to operate Prices set according to cost of production formula Initial pricing formula applies at farm level Secondly, pricing at processor or wholesale level done administratively, specifically w/ a processor allowance Both pricing procedures in contrast to less regulated market environment, where you meet competitors’ prices US situation touted as surplus production model Not so; can have government support without surplus
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This note was uploaded on 03/09/2010 for the course LFS FRE 306 taught by Professor Barichello during the Winter '09 term at UBC.

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L07Sep09.306 - Lect 6: Monopoly on Farm Products FRE 306...

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