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Abstract
This paper presents a model of economic behavior that explicates the phenomenon known as
“orderly marketing,” which was a main objective of the Marketing Orders agricultural program
introduced early in the New Deal. Recent analyses of marketing orders start with an implicit
assumption that there is no market failure—thus, that price regulation can cause only deviations
from the first-best market solution. However, historical evidence suggests that disorderly
marketing might refer to a kind of market imperfection. In the model presented here, a
monopsonist processor sets a price to be paid, and an aggregate quantity to be purchased. In
some states of the world, some farmers are excluded from the market. In other words, nonprice
rationing can occur, and changes in consumer expenditure for the final product are absorbed
by the processor rather than passed along to the farmer. The classified price and pooling
provisions of federal orders can lead to a Pareto improvement in welfare.