MARKET CONDUCT UNDER GOVERNMENT PRICE INTERVENTION IN THE US DAIRY-INDUSTRY

The degree of market power exercised by fliud and manufactured process ors in the U.S. dairy industry is estimated. Appelbaum's quantity-sett ing conjectural variation approach is cast into a switching regime fra mework to account for the two market regimes created by the existence of the dairy price support program: (a) government supported regime (m arket price is at the support price) and (b) market equilibrium regime (market price is above the support price). The model is also used to test whether government price intervention has a pro-competitive or an ti-competitive influence on market conduct.