Market Power in the Fluid Milk Industry in the Eastern United States

The motivations for this case study are recent developments in the fluid milk industry in the Eastern United States. These developments reflect the effects of increasing consolidation and concentration as well as emerging competition issues related to the buyer and seller market power of fluid milk processors. Using a marketing margin framework, this case study provides simple contemporary applications of the economic models of the profit-maximizing behavior of firms possessing buyer and seller market power in the fluid milk processing industry. The case study illustrates a marketing margin analysis, as applied to the fluid milk supply chain, including a basic empirical market and price analysis. The intended audiences are undergraduate and graduate students as well as extension and outreach audiences. The case study includes a teaching note with a set of discussion questions and suggested answers. In addition, the teaching note discusses teaching objectives, teaching strategies, and student background knowledge