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Abstract
Linkages between the regulated and unregulated dairy markets in Kenya were examined using an
econometric model of the fluid milk intake for eight processing plants. Counter-intuitive results
were obtained: an increase in the regulated price was significant in decreasing intake in the regulated
market, indicating that a price increase in the regulated market also increased price and
quantity supplied in the unregulated market. Lagged rainfall was a proxy for available feed and
was highly significant in explaining milk intake in the regulated market.