Piecemeal Farm Regulation and the U.S. Commerce Clause

Since January 2015, California has required that all shell eggs consumed in the state be produced cage free or by hens housed in enlarged cages defined under Assembly Bill 1437. This paper assesses the effects of California farm animal housing restrictions on egg prices and production practices inside and outside California, and on the volume of interstate trade. We find that the California regulation generated short- and long-run egg price increases across the U.S. It has also bifurcated production methods outside California yielding more concentrated interstate trade. The largest share of the associated private costs was borne by out-of-state consumers. The balance between a state's power to regulate food production within its borders and the impacts on out-of-state producers and consumers has potential legal implications under the dormant Commerce Clause of the U.S. Constitution.