The curious case of horne v. department of agriculture: Good law, bad economics?

This paper uses economics to examine the facts and ruling in the recent case Horne v. Department of Agriculture. The paper argues that the Raisin Administrative Committee (RAC) is best viewed as a government-enforced cartel that has raised the domestic prices of raisins since its inception just after World War II. The plaintiff Horne is best viewed as a cartel defector who benefited from the supply restriction of the RAC and thus was most likely compensated for the taking of his raisins by the higher prices resulting from the RAC. The government in defending the RAC chose not to stress this point, perhaps because there is little political support for such agricultural marketing orders today. The Court's decision reiterated the rule that personal as well as real property must be compensated if taken by the State. This decision is unlikely to have much impact on state eminent domain actions which are overwhelmingly involved with real property for the construction of roads, schools, and so on. The rule might, however, limit the ways in which the State can enforce cartels, and in this regard the ruling would be efficiency-enhancing.