The ultimate effect of all forms of taxation on goods is therefore that both buyers and sellers are affected, as the market responds to both changes in demand and supply, regardless of which carries the initial effect.
II. PRICE CONTROLS and TAXATION on MILK
According to Chris Edwards (2007), the milk market has been affected by government-imposed price controls since the 1930s, with the implementation of "marketing order" regulations. According to these, minimum prices were imposed upon diary processors, which were payable to farmers. This policy limits marketing competition by imposing a minimum government price upon dairy products. In other words, entrepreneurs are unable to supply dairy products at competitive prices and raise demand as a result. Another effect of this price control factor on the market is that lower-cost regions are restricted from obtaining market shares in regions where the costs are higher. Specifically, Edwards notes that Cincinnati residents were paying an average of $2.68 per gallon of milk in 2006, compared with New Orleans residents, who paid $4.10.
A further control upon price was imposed in 1949, according to Edwards, when a price-support program was implemented to assist farmers. In this program, government guaranteed their purchase of cheese, butter and dry milk at a minimum price; in this way ensuring that market prices remained high. A further income support program was implemented for dairy farmers in 2002, by which cash payments would be distributed if prices fell below predetermined...
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