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1 Ekonomický časopis (Journal of Economics)

1 2012

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MILK DISPENSERS IN SLOVAKIA: WHAT IS BEHIND THE RECENT BOOM?

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Drábik D. , Adame M.

Ekonomický časopis (Journal of Economics)

2012

tom 60

nr 1

50 – 64

We provide a possible explanation for the sudden appearance of milk dispensers throughout Slovakia between 2009 and 2010. We identify three main factors: (i) higher profits earned by selling raw milk through dispensers relative to those earned through milk processing plants, (ii) very short pay-back period of dispensers, and (iii) high cumulative discounted profits generated from dispensers after they pay back. Nonetheless, we do not expect that new milk dispensers will show up in the future; on the contrary, we expect their number will decrease. It is because the consumers demand for raw milk has been decreasing significantly recently, suggesting that the vending machines were only a consumer fad. As a result, the farms that pioneered the operation of milk dispensers (especially in larger cities) are now the ones that may have benefited most from the subsidy.