Deregulation and subequilibrium in the Australian dairy processing industry

The Australian dairy processing industry is currently undergoing a program of substantial regulatory reform. In this paper we assess the impact of thi s deregulation on the production and cost systems of the industry. This is undertaken using a translog restricted cost function, for the period 1969 t o 1996, with labour, milk and energy as the variable inputs and capital as the one fixed input. We find that this industry has undergone significant c hanges in terms of factor demand and cost structures associated with the in troduction of new technology.