Market and Welfare Effects of the U.S. Livestock Mandatory Reporting Act

This paper analyzes the market and welfare effects of the United States Livestock Mandatory Reporting Act enacted in 2001. The act mandates meat packers to report their transactions daily to a government agency and requires the agency to make a summary of those transactions available to the public through the Mandatory Livestock Meat Market News Reports. Considering the case of an imperfect packer cartel that uses trigger price strategies, this paper examines the impact of market information provided by the reports on equilibrium livestock slaughter and the welfare of the groups involved and identifies the determinants of the socially optimal level of information. A key result of the paper is that, even when facilitating collusion among packers, increased market information can be social welfare enhancing.