This paper analyses differences and development of regional distribution of marginal costs of dairy production in the EU and how they are affected by structural change in the dairy sector and different national quota regimes. The empirical analysis employs multiple-input-multiple output cost functions, estimated using an unbalanced panel data set of the European Farm Accountancy Data Network. The results show marginal costs for different types of dairy farms and the distribution of marginal costs across farms within the region. A clear tendency towards a more balanced distribution of marginal costs within the regions can be found whereas the impact of different quota regimes on this development remains vague.