Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284060 
Year of Publication: 
2023
Series/Report no.: 
Working Paper No. WP 2023-19
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
Governments spend considerable resources providing goods directly. We show that such behavior may increase welfare when private suppliers have market power. We do this by studying the staggered rollout of hundreds of government milk "ration stores" in Mexico using a proprietary panel of household food purchases. The rollout lowered the price per liter of privately supplied milk by 2.4% and increased household consumption. To compare direct provision with budget-neutral alternatives, we develop and estimate an equilibrium model of the market that accounts for quality differences. Direct provision generates larger consumer surplus than milk vouchers and unrestricted cash transfers.
Subjects: 
private and public provision
market concentration
milk
JEL: 
H42
L33
L44
L66
O15
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.