The Social Welfare Loss from Egg and Poultry Marketing Boards, Revisited

Abstract

Continuing conflict over supply management warrants another look at its costs. The authors' model combines the traditional welfare triangle with the social welfare loss created when farmers bear the investment risk associated with possible termination of quota protection. The annual net social welfare loss from egg and poultry marketing boards likely exceeds $100 million, with consumers losing more than $500 million. Half the net social welfare loss is the cost of risk bearing. Quota prices imply that farmers expect quota lives to be relatively short. Therefore, changing to short fixed terms might halve the social welfare loss without imposing capital losses on farmers and might facilitate a return to a free market or auctioning new fixed term quotas.