Price spreads for California—Arizona navel oranges during and after the 1985 prorate suspension



In January 1985, rate-of-flow controls (“prorate”) for California—Arizona navel oranges were suspended for half the marketing season. This article compares the behavior of industry marketing margins during the deregulated period with that of regulated seasons in order to assess the impacts of the prorate suspension on the navel orange marketing system. Econometric results indicate that relative to subsequent regulated seasons, marketing margins contracted during the prorate suspension period. These results suggest that distributors did not exercise market power during the suspension period in order to maintain consumer prices at pre-suspension levels while depressing grower prices.