Institutions and territorial structuring: the transformation of the dairy sector in France and Germany

ABSTRACT This article develops a multiscale institutional framework to shed light on the territorial dynamics of a sector. The case of the long-term transformation of the European dairy industry shows that, within a common European regulatory system, sectoral communities are structured territorially in Germany and nationally in France. Second, a change in public policies exerts pressure not only on firms’ adaptation capacities but also on sectoral communities. Third, territorial institutions appear primary in structuring sectoral dynamics when territorial players (public, private and collective) create, pool and sustainably manage productive resources, either for integration into a wider market or for developing a local means of competing.


INTRODUCTION
In a post-Fordist economy, firms, industry and regions increase their focus on non-cost competitiveness and their adaptation capacity (Porter, 1989;Kitson et al., 2004;Jongeneel et al., 2010). A shift from focusing on the geography of costs to focusing on the geography of organizations has been observed (Veltz, 1993;Martin & Sunley, 2011). Regions, understood as a social construct Keating, 2017), can contribute considerably to the competitiveness of firms by affecting their performance and resilience. This contribution is especially true in the case of intangible, non-tradable resources (Boschma, 2012). Three forms of territorial structuring have been particularly emphasized: the revival of craft districts; the emergence of high-tech clusters; and financial and service megalopoles (Scott, 1988;Benko et al., 1996). In addition, the qualitative turn of the post-Fordist economy created opportunities for market differentiation based on place (Callon et al., 2002;Allaire, 2010). Territorial differentiation benefits from an image of authenticity that can be valorized beyond the local community, notably in the agricultural sector in the case of geographical identification (Requier-Desjardins, 2009;Pecqueur, 2001). 1 Public policies have attempted to foster knowledge collaborations and to support the formation cluster to create value (Vicente, 2018). However, empirical findings have tended to moderate the contribution of such territorial initiatives to the emergence of industries. Their 'one size fits all' approach does not always match the diversity of geographical and technological contexts. Furthermore, the coordination of economic and innovation activities within complex supply chains in a global economy (Malerba, 2005;Gereffi et al., 2005) and the growing importance of organizational proximity over geographical proximity have tended to reduce the role of territorial institutions (Torre, 2008). Territorial institutions seem to play an indirect role by stimulating localised knowledge spillovers and spinoff dynamics (Boschma & Frenken, 2009). Alternatively, these institutions are secondary, reinforcing spatial dynamics through the elaboration of specific regional institutions to support technological change (Boschma & Frenken, 2009). Finally, territorial structuring, like any other development path, can also trigger lock-in (Boschma, 2005). Path dependency indeed reflects the cumulative nature of learning since it gives significant weight to initial choices that can lead to a lock-in situation when one technology becomes so dominant that it prevents others from developing. This definition, first elaborated for technological innovation, has gradually come to be used for institutional innovation (Dosi & Nelson, 2010;Markard & Truffer, 2008).
In summary, the role of institutions in framing the territorial dynamics of an industry has been explored (North, 1971;Aoki, 2007;Geels & Raven, 2006;, but the scope and modality of their action is still debated. The present study attempts to contribute to the debate by developing an operational framework to grasp the diversity and complex multiscale arrangements of institutions structuring the dynamics of an industry. We do so by enriching the analysis of the various scales and forms of social regulations proposed by original institutionalism (Commons, 1931) with recent developments from regulation theory (Boyer, 2003;Du Tertre, 1995) and economic sociology (Fligstein, 1996).
The recent spatial dynamics of the European dairy industry are of particular interest because, from 1984 to 2015, public quotas constrained the geography of the industry. European and national production ceilings were set in 1984 based on the level of production from the three previous years to reduce the cost of the public administration of dairy markets (tariffs, intervention mechanisms and subsidies for product disposal). The member states were allowed some liberty to implement the quotas, rendering them a more or less constraining tool in terms of the spatial spread of production (Barthelemy & Boinon, 2001;Dervillé et al., 2012). From 2003 onwards, the tariffs protecting the European market were reduced, and the internal prices gradually decreased to the level of the international market price. Building on this situation and considering the growing international demand, the European Commission decided to gradually increase quotas until their removal in 2015. In parallel to the liberalization of the European dairy market, a new common market organization (CMO) was established in 2013 and provides incentives for private ordering and monitoring of production through contracting. How would such a change in public policy impact the structuring of production? Considering that dairy firms were concentrated and became internationalized from the 1990s onwards, what would be the spatial impact of such a change in policy? More broadly, what is the capacity of dairy farms and dairy firms to adapt to the spread of international price volatility in Europe (Pouch & Trouvé, 2018;Bouamra-Mechemache et al., 2008)? Recently differentiated increases in production suggest that liberalization is weakening some production systems (in mountainous and low-density areas) and strengthening others (i.e., the Irish and northern European systems) (Nicholson, 2015;Derville & Fink-Kessler, 2019). Does this development mean that the end of the quotas is triggering concentration processes in areas with a comparative advantage in terms of generic factor endowment? Alternatively, can the history of milk production contribute to anchoring production on the basis of past investments (Krugman, 1996) or resource specifications (Maskell & Kebir, 2005), and if so, under what conditions? More broadly, what lessons about spatial sectoral dynamics can be learned from the revamping of European dairy production following the liberalization of the Common Agricultural Policy (CAP)?
The present study focuses on institutions to support a multiscale analysis of a diverse industry's collective capacities to adapt to a liberal change in public policy. Following this introduction, section 2 presents the institutional analytical framework elaborated and the comparative mixed methodology mobilized. The regional comparative analysis of the dairy sector dynamics is provided in section 3, and the results are discussed in section 4.

A COMPETITION REGIME APPROACH TO REGIONAL SECTORAL DYNAMICS
Building on regulation theory, the nested scales and forms of the social regulation of J. R. Commons and the Fligstein typology of market institutions, we develop the framework displayed in Figure 1, aiming to grasp the diversity and complex multiscale arrangement of institutions framing the spatial dynamics of a sector.

Insights into sectoral dynamics from regulation theory
Regulation theory aims at 'making explicit the institutions necessary and sufficient for the viability of a capitalist economy and then analysing their dynamics within each institutional arrangement observed in a given area and period of time' (Boyer, 2003, p. 81, translation by the authors). It considers institutions from a historical perspective and as a mediation between microeconomics (individual choices) and macroeconomics (observed structures). It defines a development regime as the arrangement of institutions (mode of regulation) required to ensure the dynamic reproduction of economic relations (accumulation regime) (Boyer & Saillard, 2005). This macroeconomic perspective (Figure 1, II, corresponding to the socio-economic order in the Commons analysis) is not central to our analysis; rather, it is a context in which sectoral dynamics occur and to which they contribute.
Regulation theory was instrumental in defining the Fordist economy that spread from 1945 to 1970 in Europe. The Fordist development regime corresponds to a mode of industrialization based on technical divisions of labour and standardization of outputs, leading to massive-scale economies. This accumulation regime was stabilized by a Keynesian policy that directed the economy, the establishment of a welfare state and the negotiation of a favourable wage relationship mediated by the state. It is associated with the emergence of great industrial regions marked by a centre composed of propulsive industrial sectors driving forward through intricate input-output connections and dense systems of upstream producers (Scott, 1988). The agricultural sector was affected by the Fordist regime (industrialization of food chains) and contributed to it in two ways: the production of affordable food and the liberation of the workforce for the industry (Du Tertre, 2002).
In addition, one of the five key institutions of the regulation mode, competition, is of particular interest in studying sectoral dynamics. It defines 'how relations are organized between a set of dispersed accumulation centres 894 Marie Dervillé et al. whose decisions are a priori independent of each other' (Du Tertre, 2002, p. 82). The attention given to institutions allows us to characterize the sector not only from the point of view of a product but also as 'a productive whole, grouping actors who share the same productive aims and whose extended reproduction is ensured by institutional arrangements which structure and develop this space of relations' (Laurent et al., 2008, p. 28). These arrangements may be spatially contrasted, as demonstrated in the wine industry (Bartoli & Boulet, 1990;Touzard, 1995), as well as in the dairy sector (Dervillé & Allaire, 2014). Considering the dairy sector from a regulatory perspective means identifying the institutional arrangements that frame this sphere of activity and its eventual spatial heterogeneity.
2.2. The four scales and two forms of social regulation of J. R. Commons As a complement to regulation theory, Commons identified four scales and two forms of social regulation selected by experience in various collectives: ethical framing behaviours at the meso-and meta-levels ( Figure 1, II and IV), as well as law, which is made effective by the legitimate violence of the state, and the maintenance of a macroeconomic order (Figure 1, III). From this multiscale perspective, the transaction is the elementary unit of analysis (Figure 1, I). Sector and territory can be defined as meso-economic orders authorized by law and made effective by collective sanctions (Figure  1, II). Collective control is exercised informally in the form of customs (because of repeated interactions, individual habits coevolve with collective habits; hereafter defined, following Fligstein, as the conception of control) and more formally in the form of rules internal to organizations (hereafter, governance structures). At the national socio-economic macrolevel (Figure 1, III), the law ensures the correlation of various economic, social and political organizations and stabilizes the socio-economic order. Finally, at the metalevel, reasonable values ( Figure 1, IV) 'accomplish the main task of keeping the collective organization going, and if by revolution or conquest they are changed, … then it is the concepts of reason and reasonableness that change with the new order instituted … ' (Commons, 1934, p. 763;quoted by Théret, 2005).
These complementary forms of social regulation of economic activities support the definition of rights of property as a bundle of rights made effective by various interlocking collectives. Rights of property 'are the concerted action, which regulates the conflict' (Commons, 1934, p. 303). In addition, Commons highlighted three forms of property that have gradually emerged: corporeal, incorporeal, and intangible property. Corporeal property is the physical output of human activity: 'Incorporeal property is the legal enforcement of approved contracts; and intangible property has come to be distinguished … as the Institutions and territorial structuring: the transformation of the dairy sector in France and Germany 895 purchasing power of any and all property upon the markets … ' (Commons, 1925, p. 373). This purchasing power is linked to an exchange value (a scarcity value) resulting from a right of retention that has been granted to a community. From this perspective, property rights not only favour the capture of value by equity holders but also can grant rights to communities by acknowledging their skills and social contributions. In the current functioning of the milk market, several property rights are articulated: corporeal property rights can be claimed based on the physical composition of milk and the European definition of standards; incorporeal property rights can be claimed in the cases of private brands and direct sales; and intangible property rights can be claimed by various groups of farmers (public rights for any quota holders and sectoral rights for members of cooperatives or regional rights for members of groups with certain geographical identifications) (Dervillé & Allaire, 2014). Hereafter, we focus on the intangible property rights resulting from various forms of collective action. We distinguish public rights as rights resulting from the application of public policies and law and territorial and sectoral rights as rights resulting from informal (conceptions of control) and formal (governance structures) collective action. In other words, the conception of property as a bundle of rights makes it possible to capture sectoral and territorial structuring as a specific mode of building and allocating various rights to resources. As such, the dairy sector corresponds to the enterprises (with competition), as well as to the administrations, unions, and joint enterprises, such as research centres or boards (that entail cooperation), which share the same productive role and in which dynamic reproduction is authorized by law and granted by ethics.
2.3. From the Fligstein typology of market institutions to sectoral and regional competition regimes Building on Fligstein's (1996) typology of market institutionsexchange rules, governance structures, conception of control and property rightswe previously defined the competition regime as the institutional arrangement of four institutions that delimit possible competitive strategies (Dervillé & Allaire, 2014;Derville & Fink-Kessler, 2019). Here, the distinction between law and ethics emphasized by Commons and the definition of intangible property in terms of bundles of rights lead us to delimit the four market institutions more strictly than Fligstein did. The rules of exchange and public governance structures are renamed public regulations to emphasize that they are derived from law. They 'define who can transact with whom and the conditions under which transactions are carried out' (Fligstein, 1996, p. 658). They refer to European trade and competition laws, as well as to European dairy policy and its national implementation. Since the creation of this dairy policy (market intervention mechanism, bottom prices, export subsidies and the quota system), public authorities have contributed to the separation of national and international markets.
Governance structures correspond to rules that are 'embedded in existing organizations … and are available to actors in other organizations' (Fligstein, 1996, p. 660). Governance structures gather several actors and structure their interactions (Vatn & Bromley, 1994;Ostrom, 2010). They favour deliberation and contribute to the collective capacity to innovate (Cholez et al., 2017). For example, in France, the French Dairy Interbranch Organization (CNIEL) has played a structuring role first at the regional level (since 1969) and subsequently at the national level (since 1974). Since 1997, it has brought together representatives of farmers, cooperatives and private processing enterprises and managed (1) quality issues related to milk and dairy products; (2) the promotion of dairy products; and (3) the modalities of establishing milk prices.
Like Fligstein, we consider the conception of control to be the result of the repetition of behaviours (with change accounting for learning processes) propagated by imitation and tacit selection and leading to a shared vision supporting market structuring and allowing the actors to interpret their actions. 'They allow actors to interpret their world, make expectations, and act to control situations' (Fligstein, 1996, p. 658). Conceptions of control are deployed in sectoral and territorial fields (double black arrows) and concern both (1) productivity conventions (or effort conventions) and (2) quality conventions, which support market exchanges (Favereau et al., 2003). As governance structures, they ensure the internal cohesion of the field.
Finally, bundles of intangible property rights are concerted actions that result from the combination of the previous institutions. We distinguish among (1) public rights directly derived from public policies or law (such as access to stabilized remunerative prices granted by market administration and quotas), (2) sectoral rights derived from sectoral collective action (such as access to a sectoral price premium or input granted by a collective cooperative or interbranch organization), and (3) territorial rights derived from territorial collective action (access to a territorial price premium or input granted by a collective organization, such as a territorial advisory service, territorial association of producers, or collective territorial brand).
Thus, in the competition regime approach, sectoral rules of exchange are constrained by the mode of macroeconomic regulation (Figure 1, III). They are both rendered effective and extended by the sectoral governance structures that coevolve with the sectoral conceptions of control and the structuring of activities (Figure 1, II). Furthermore, a territorial scale of structuring economic dynamics can emerge when market institutions adopt a particular regional configuration that gives rise to particular intangible rights (Figure 1, II). This regional competition regime then coevolves with the (sectoral) competition regime and the development regime. The sectoral and/or territorial competition regimes frame bundles of public, sectoral and territorial intangible property rights that determine the possibilities of action for various market operators (Figure 1, I). Considering the multilevel dimensions of 896 Marie Dervillé et al. innovation processes and market institutions, the competition regime framework has multiple scales. In the present study, we focus on three interrelated scales of action: (1) European, including the CAP, as well as general features of the Fordist accumulation regime; (2) national, entailing national choices in terms of public policies and sectoral community regulation; and (3) regional, accounting for regional public policies, governance structures and the conception of control. The regional capacity to accumulate competitive resources and to create specific conditions to access the market is considered here a regional differentiation of the (sectoral) competition regime.

A historical comparative methodology
A historical comparative approach enables researchers to explore the similarities and differences between complex situations by comparing configurations, pathways and outcomes across comparable systems (Marx et al., 2014). While comparative economics initially focused mainly on national comparisons, interest in subnational comparisons has recently been increased (Snyder, 2001). First, this method is a way to establish control over historical, ecological, and cultural conditions. Second, it offers an indispensable tool for understanding the decentralizing political and economic trends of the contemporary era. Case studies are particularly relevant for the in-depth study of contemporary processes and phenomena in real contexts (Yin, 2009). A comparative and historical case study is implemented to disentangle the complexity of drivers of the territorial dynamics of an industry over time.

Choice of regions studied
Germany and France were chosen as case studies because they are the two largest agricultural producers in the European Union (EU) and the two most influential political players in terms of European agricultural policies. In addition, they have different conceptions of food quality (Valceschini & Mazé, 2000, p. 37;Sylvander et al., 2007, p. 4) and have adopted different quota systems. Therefore, assessing how these two leading countries have adjusted to the evolution of the CAP, the quality turn in the market and the environmental emergency is of particular interest. Two regions in each member state were chosen for their contrasting industry profiles based on previous works (Derville & Fink-Kessler, 2019). Brittany (France) and Lower Saxony (Germany) are specialized dairy regions that are experiencing the development of milk production and strong integration into international markets, while Occitania (France) and Bavaria (Germany) are regions with contrasting agricultural potential, mountainous areas and numerous specific quality food chains.

Mobilized data: interviews, literature and statistics
The case studies are informed by three data sources that enable information triangulation: (1) the scientific literature and secondary data (reports, press reviews); (2) national and regional statistics relative to the dairy industry, including the mobilization of the European Farm Accountancy Data Network (FADN) data, enabling the comparison of farming systems across European member states and regions; and (3) semi-directive interviews with various stakeholders of the dairy industry in the four regions. A total of 73 interviews were conducted in 2018 (for more details, see Appendix 1 in the supplemental data online); they were transcribed (for accuracy) and coded to characterize the market institutions. These three sources of information were combined, and the four types of market institutions accounted for in the elaborated frameworkpublic regulations, governance structures, conceptions of control and intangible property rights were characterized at three scales (European, national and regional) and for a period spanning from the 1950s to 2018. For brevity, only the main characteristics of the four market institutions are described in the results section, while the details of the indicators used to describe them are presented in Figures A1 and A2 and Tables A2-A4 in the supplemental data online).

RESULTS: COMPETITION REGIME DIFFERENTIATION AS A WAY TO COPE WITH LIBERALIZATION
Economic transitions are complex long-term processes. The European institutions of the Fordist competition regime are highlighted before presenting the regime's phased exit. The section then focuses on national specificities, while it questions the existence of regional competition regimes.
3.1. The spatial dynamics of the European dairy sector in the Fordist and post-Fordist economies In Europe, the Fordist development regime  was accompanied by a partial industrialization of food chains. The European CAP was key in turning the European agricultural economy into an agro-industrial economy (Malassis, 1977). It was also accompanied by a qualitative turn with the establishment of quotas and superior quality standards.

Industrialization and spatial concentration of production
The European dairy sector benefited from a CMO with border protection, intervention prices and support for internal and external product disposal from 1968 to 2013. The European Council Regulation directly controlled the quality (including the development of industrial standards for milk -3.7% MG, butter and skimmed milk powder), prices and quantities (beginning in 1984). This CMO reduced competition and constrained market logic so that farmers' incomes did not depend solely on competition but were guaranteed for any farmer who could meet the professional standard (Barthélémy, 2000). In other words, this market administration led to the creation of public rights for farmers (Servolin, 1989;Muller, 2000;Allaire, 2018). Protective rules of exchange and the growing demand for standardized food products led to the emergence of new identities. Benefiting from relatively stable prices, as well as from subsidies for investments, farmers who could invest adopted more motorized and artificial processes, relying on the usage of petrol, fertilizer and chemicals (Daviron & Allaire, 2019). Farming became increasingly professional, meaning that it increasingly occupied a sectoral space in which agricultural organizations defined new rules of excellence and therefore a new peasant identity no longer rooted in place-based relationships but rather in technical competence (Muller, 2000). However, despite benefitting from governance structures (such as syndicates and agricultural chambers) and from a complex innovation distribution mechanism, including public, private and collective actors (Aggeri & Hatchuel, 2003), farms retained some autonomy and remained familial (Mundler & Rémy, 2012).
The capitalization of agriculture was accompanied by a specialization process that further accentuated the concentration process. In the context of standardized industrial quality, production became concentrated in areas with a comparative advantage in pedoclimatic conditions and transportation costs (proximity to harbours for feed imports) and increasingly with dynamic economies of scale (Krugman, 1987): European milk production became concentrated in the Atlantic and North Sea belts (Mosnier & Wieck, 2010).

Quality turn under rationed supply
The implementation of quotas created a rupture in 1984, while entry into a more qualitative regime was more gradual.
In 1984, production rights were created, notably at the request of Germany, to bring the level of supply closer to that of European demand and to reduce the cost of storage of excess butter and milk powder, as well as the cost of export subsidies. Controversies regarding the economic efficiency of quotas and the diversity of dairy situations in each member state led to great freedom in national implementation. Quotas stopped the growth of milk production and limited spatial concentration, at least at the national level and in some cases (such as those of France and Germany initially) at the subnational level.
The saturation of the European market combined with the creation of a single market (1986) led to the intensification of competition and later to a change in its form. Gradually, cost and non-cost competitiveness were combined (Porter, 1989;Allaire & Boyer, 1995). Following mad cow disease and the dioxin scandal of the 1990s, industrial quality was increasingly questioned (Sonnino et al., 2008;van der Ploeg et al., 2009). The European food quality policy evolved in two ways. First, superior quality labels were officially recognized (organic farming in 1991 and geographical identification in 1992). These public labels convey value based on production modes and can support a specific spatial anchoring of production (Marsden et al., 2000;Perrier-Cornet & Sylvander, 2000;Torre, 2002;Dervillé & Allaire, 2014;Praly et al., 2014). Second, the adoption of food safety policy (2002) standardized the level of health safety by involving all actors in the food chain, formalized the actors' responsibility and optimized the controls implemented by health authorities (Meuwissen et al., 2003). In summary, the qualitative turn was based on two processes in tension: the search for services (enriched and ready-to-eat products), which corresponded to a deepening and diversification of industrial quality, and the search for authenticity (local, organic agriculture and fair trade), which resulted from the rejection of industrialization (Allaire, 2002). The establishment of a second CAP pillar in 2000 also addressed the questioning of the industrialization of European agriculture and renewed the legitimacy of the CAP. Focusing on rural development and the reconsideration of agricultural multifunctionality (maintenance of countryside and environmental services), it reinforced the service dimension of agriculture.
Private operators adjusted to these changes in regulations and demand by combining integration and diversification. Dairies restructured in the 1970s, expanding their size and scale of action and changing the market structure to a monopsony in most cases. They invested in intangible resources, created private brands and standards and changed to demand-driven business models. Furthermore, as supermarkets developed, their growth and concentration gradually revamped the market power of food chains (Kühl et al., 2016;Hofstetter, 2019). By controlling the transition from wholesale to retail prices, large retailers become the captains of the agri-food industry (Busch, 2011). In summary, the qualitative turn under rationing slowed the spatial concentration of production in two ways: the territorial management of quotas (a generic resource) and the opportunities offered by the quality turn to create place-based market differentiation strategies (territorial specific resources).

The neoliberal turn of the CAP
The reintroduction of agriculture to international trade negotiations and changes in societal expectations led to both the liberalization and greening of the CAP. The CAP reforms (1992, 1999, 2003, 2008 and 2013) progressively weakened the EU's role as a buyer of last resort and thus gradually aligned European prices with world prices. Subsidies paid per hectare and partially compensating for declining prices were gradually conditioned by respect for environmentally friendly practices. Because of the stabilization effect of the quota system, the decline in tariffs affected the industry only in 2003. The decrease in intervention prices and the gradual quota increased from 2008 until the abolition of quotas in 2015, resulting in an increase in European and international price volatility and creating a shock for most European farmers in 2009. As a result, the European Commission adopted a set of measures (the 'milk package' in 2012) aimed at fostering the private governance of dairy chains through contracts and the collective bargaining capacity of dairy farmers. However, crises in 2015 and 2016 revealed the vulnerability of the dairy industry and the insufficiency of the existing regulations (Pouch & Trouvé, 2018). The differentiated increases in production across member states suggest that the spatial concentration of milk production has resumed. These European political and economic driving forces impacted France and Western Germany. However, differences in history, geography and governance regimes (Servolin, 1989;Muller, 2000) led to different collective choices, and the structuring of production forces formed different organizational and spatial patterns.

Earlier exit from the industrial competition regime in Germany
Major differences between France and Germany include the time frame and the scale of the structuring of public and collective action. The main market institutions are described in the German and French cases before being compared.

Industrialization under national (France) and regional (Germany) forces
Centralization in France favoured the national structuring of sectoral resources. In Germany, political and economic forces, structured at the Länder level, favoured more regional structuring.
Prior to EEC adhesion, the organization of the dairy industry in Germany was influenced by two laws: (1) the 'Milch und Fett-Gesetz' (Law of Milk and Fat) (1952) organized production and strengthened producer-dairy relations with the institution of the full intake principle 2 and quality payment for milk; and (2) the Marktstrukturgesetz (the Market Structure Act) (1968) granted producers the right to collectively negotiate prices. The CMO, combined with a system of positive monetary compensation (1973), allowed German farmers to benefit from real domestic prices that were higher than European prices. In the late 1970s, Germany progressed and became a net exporter of dairy products (see Appendix section 2 in the supplemental data online). Whereas the federal Ministry of Agriculture (MoA) has power over transversal issues, the Länder Ministries of Agriculture have wide room to manoeuvre in terms of both education/research and advice systems, as well as, later, one part of the CAP implementation. In combination with the regional structuring of the industry, 3 the Länder agricultural policy preserved the regional character of milk transactions, quality conventions and productive structures.
In France, the national administration enacted a set of orientation laws (1960, 1962 and 1964) aimed at promoting the transition from heritage farming to modernized agriculture (Allaire, 1988;Muller, 2000). The dairy sector, which can increase income produced with limited land through intensification, was particularly affected by this development (Mundler & Rémy, 2012;Muller, 2016). The National Federation of Dairy Farmers (FNPL) was created in 1969, not only to defend milk prices but also to promote the use of a particular structure by dairy farms, that is, the two-worker family farm. The Godefroy Law (1969) favoured the collective management of sectoral issues and supported the gradual institutionalization of 'all-purpose milk' (based on a national milk payment grid), in turn supporting productivity gains (the exchange of collection routes across dairies reduced collection costs).
In summary, in Germany, regional farmers' governance structures (i.e., unions, the Milcherzeugergemeinschaft: MEG, cooperatives, and advisory services) and the conceptions of control, at the origin of regional property rights, favoured the coexistence of a diversity of systems. In France, the governance structures (interbranch, dairy council and FNPL) are sectoral, operate at the national level, and favour the convergence of the conception of control. Therefore, French farmers' additional rights have a more sectoral basis.

Quality turn under rationed supply: a comparison
In Germany, the quota system has not questioned the producer-dairy alliance (interviews). In addition, quotas became tradable in 1999. Regional dynamics remained central and differentiated, reducing competition between the northern and southern dairy industries. In terms of quality, greater emphasis was placed on environmental concerns (Schritt et al., 1977). Germany started supporting organic farming as early as 1988.
In France, the coadministration of the quota played a structuring role for 30 years. Desertification is indeed perceived as a major drawback of the industrialization of agriculture. Non-tradable quotas defined at the department level limited the spatial concentration of production and the development of medium-sized farms (Dervillé & Allaire, 2014). In addition, regional and, from 1997, national interbranch agreements ensured that all farmers received the same base price, regardless of the outlets of their collection company. Therefore, milk transactions were nationally mediated by collective players for more than 20 years. The territorial anchorage of production was ensured, owing mainly to the management of generic sectoral resources (quotas) at the departmental level. In parallel, early policy, designed to ensure superior quality through the institutionalization of collective quality certifications, encouraged territorial approaches to controlling competition and supporting alternative methods of farming (Roquefort, 1919, andother cheeses, 1955;Label Rouge, 1960;and organic farming, 1981) Torre, 2002;Perrier-Cornet & Sylvander, 2000).
In summary, during this period, the intangible property rights of dairy farmers in France and Germany were linked to the European rationing policy. In France, the national interbranch agreement created sectoral property rights: all quota holders benefited from the same milk payment grid. Quality labels (products of designated origin, red and organic labels) are identified here as the only significant source of milk price differentiation (Desbois & Nefussi, 2007). In Germany, in contrast, the transaction of milk remained firm specific.

Early liberalization in Germany and the struggle for adaptation in France
A striking difference is the time frame in which a liberal turn was taken (Figure 2).
Institutions and territorial structuring: the transformation of the dairy sector in France and Germany Germany's reunification in 1989 and the integration of large dairy farms in eastern Germany resulted in a liberal shift in agricultural policy. First, the primacy of the economic function of farming was supported by the development of training and skills involving production cost monitoring. Second, following the bovine spongiform encephalopathy (BSE) crisis and the nomination of the first 'green' minister of agriculture, R. Künast, a major recovery plan for German agriculture was developed (and has been continuously renewed ever since) to support the dissemination of knowledge and the structuring of organic supply chains. In addition, the Länder of Southern Germany established their own agri-environmental programmes to support small farms and maintain an attractive rural area: KUlturLAndschaftsProgramm (KULAP) in Bavaria and MEKA in Baden-Württemberg. This proactive policy (which includes incentives to preserve the landscape, the creation of a regional brand, and support for organic farming) initiated a qualitative turn in Southern Germany. Third, as early as 2003, Germany chose to decouple and homogenise direct subsidies. In addition, the markets for quotas were extended (2007). Both measures reinforced the concentration of production in grass-based areas, particularly in Northern Germany. Fourth, the Renewable Energy Sources Act (EEG) (enacted in 2000 with major changes in 2012 and 2015 4 ) became a 'third pillar of agriculture as important as the first pillar of the CAP' (IDELE, 2015). Furthermore, due to its similarities to the existing framework, 'milk package' implementation did not act as a constraint (Dervillé et al., 2019). In contrast, the creation of the MEG Milch board and Bayern MEG (national associations anchored in the northern and southern regions, respectively, with the aim of supporting farmers' access to information and negotiation capacity) with support from the main union in 2006 reinforced farmers' bargaining power.
In addition, German basic cheese exports have supported a dynamic dairy industry (see Figure A2 and Table  A2 in the supplemental data online). Cooperatives in Northern Germany in particular have invested in large processing facilities fit for mass production, while Bavarian dairies have built on their brands and intermediate-quality cheese for export to neighbouring markets. Furthermore, the regional autonomy in terms of agricultural policy and the CAP second pillar implementation favoured regional management of sectoral resources, supporting the coexistence of two contrasting industries. Therefore, due to the structuring of the industry and the differentiation of Länder public policies, southern dairy farmers benefit from higher prices (Perrot et al., 2009) and from higher subsidies per litre of milk (Jürgens & Poppinga, 2013) (Table A3, line 30, in the supplemental data online). However, retailers gain power by taking the lead in the quality management of dairy chains and the creation of GMO-free milk and milk that supports animal welfare. In France, the sustained legitimacy of the quota and interbranch systems, as well as the first pillar historical allocation (Figure 2), favoured the status quo and sustained the qualitative industrial regime until 2008. The quotas remained non-tradable and were managed at the departmental level, preventing the concentration of production (IDELE, 2009). Nevertheless, the modality of subsidy distribution, unlike in Germany, has continued to favour farms with the highest historical production per hectare (Kirsch et al., 2017). It was only in 2009 that the combination of several driving forces (international price volatility, increase in and abolishment of the quota, and termination of the interbranch agreement) destabilized the industrial competition regime. Public and collective responses were gradual and non-systemic. First, contracts were made compulsory in 2010, before the producers' organizations could negotiate them, which made them de facto 'quotas' without price compensation (Berger et al., 2015;Dervillé et al., 2019). Second, support for investment, aimed at structural development, gained momentum in France rather late and exposed farms to the 2016 price collapse (see Table A2 for 2016 in the supplemental data online). Third, in the absence of consensus regarding emerging business models and considering the recent introduction of strategic management in agricultural education, most farmers experienced difficulty adjusting to price volatility. In addition, several features of the dairy industry seemed to prevent the capacity of French farmers to benefit from dairy market liberalization: (1) French products (high-quality cheese) supported by skills and medium-sized processing units that have a good reputation but are not at the heart of international demand; (2) the dominance of very large international groups that develop mainly through direct investment abroad and do not offer development opportunities to French farmers; (3) collective path dependency on 'allpurpose' low-fat milk, while the demand for cream and butter is high in the international market; and (4) sectoral organization preventing operators from seizing local opportunities. The agroecological project promoted in 2014 in particular has not yet been articulated in terms of economic outcomes (Derville & Fink-Kessler, 2019). As a result, the dairies monitor supply and farm restructuring, and the conditions to access the market are becoming fragmented (Lambaré et al., 2018). Many of the farmers interviewed in 2018 stated that they felt trapped by the inherited conventional system.
As a result of the public and private choices related to the liberalization of the CAP, dairy producers' rights in terms of access to remunerative and stable markets are decreasing while their environmental constraints are increasing. The innovation system created to support modernization is only slowly being rebuilt, limiting the adaptability of dairy farms on both sides of the Rhine.
In other words, both the mode of regulation and the economic dynamics are under pressure. Overall, German dairy farmers have more adequate resources because the national public regulations undertook a liberal turn much earlier, and the regional differentiation of products, market structure, conceptions of control and governance structures appears to be an efficient way to tap into international growth while limiting competition within Germany. In France, the institutions of the industrial competition regime still dominate and prevent adaptation, suggesting a lock-in (Fares et al., 2012). Finally, for both France and Germany, the weight of alternative food chains remains limited in terms of volume (in 2008, 15% of the sector in France and less than 5% in Germany) (cf. Tables A2 and A3 in the supplemental data online).

Regional competition regime differentiation in Germany
In this final results section, we show that regionalized farmers' property rights in Germany in the current period correspond to a regional differentiation of the competition regime. In other words, building on decentralization and on the regional structuring of the market and industry, economic and public players have developed two contrasting ways to compete (see Table A6 in the supplemental data online).
In Bavaria, value creation is based on intermediatequality cheeses with solid private brands and regionalized market integration (Italy, Austria, Slovenia and later on, eastern Europe) (Fink-Kessler, 2013 and interviews). Private and cooperative dairies of various sizes coexist. The Bavarian MoA supported this qualitative development with a proactive policy (incentives to preserve the landscape, the creation of a regional brand, and support for organic farming). The Bavarian dairy industry benefits from the region's dynamism and a positive regional reputation, partly due to the presence of several leading industries and clusters in the automotive, information technology, biotechnology and aerospace fields. Liberalization did not question the common pool resources (CPRs) that have supported the development of new cooperative strategies. The creation of the Bayern MEG contributed to the development of collective bargaining capacity, which counterbalanced the concentration of downstream industries. Continuous public investment in the activity might have contributed to the regional capacity to support the development of organic and hay farming. Compared with Lower Saxony, smaller and more diversified farms have been maintained owing to the production of high-quality products, the collective bargaining capacity leading to higher milk prices and the incomes that can be obtained through various activities (wood, tourism, and KULAP subsidies).
In Lower Saxony, the dairy industry continued to export butter and milk powder to the international market. Following the reduction in export subsidies, dairy farms ventured into the industrial cheese mass market as well. Value creation occurs in scale economies due mainly to the concentration of cooperatives and farms. Milk prices Institutions and territorial structuring: the transformation of the dairy sector in France and Germany 901 are low, and farms have no choice but to cluster, specialize and grow. However, they benefit from public subsidies oriented primarily towards investments, sustaining the system. In Lower Saxony, the regional capacity for action relies on the appropriation of generic resources. Mobilized knowledge, techniques, infrastructure and norms are indeed spread out and managed in broad (national and international) sectoral frameworks. Therefore, because of the contrasting market institutions developed in Bavaria and Lower Saxony, the resources for dairy farmers are contrasted, framing their strategies: while a qualitative turn occurred in Bavaria, providing income diversification opportunities for farmers, farmers in Lower Saxony had a strong incentive to further concentrate. These findings suggest that the competition regime is specific in Bavaria and generic in Lower Saxony. For comparison, in France, the quality turn concerned mainly alternative food chains (Protected Designation of Origin (PDO) and organic), and conventional farmers in regions unsuitable for cost competitiveness (Occitania) are deprived of the capacity to activate specific resources to target the regional market.

DISCUSSION: GOVERNANCE AND SPATIAL SECTORAL DYNAMICS
The discussion is articulated around a methodological point, the insights of the elaborated framework, and the three main empirical findings.
4.1. The competition regime perspective on the multiscale dynamics of a sector The competition regime approach emphasizes the diversity of institutions (public regulations, community governance structures, conceptions of control and, finally, the resulting bundles of intangible property rights) framing firms' behaviour at contrasting scales (European, national and regional).
It is thus a way to address the need to shed light on the relative importance of firms' organizational routines and territorial institutions for regional development (Boschma & Frenken, 2009). Thus, we reached our objective to integrate complementary and conflicting drivers of the territorial dynamics of a sector (Jessop et al., 2008). In addition, the mobilization of the framework to compare the long-term transformation of the French and German dairy industries proves the operationality of the framework and is thus a proof of concept. Finally, the characterization of the four market institutions of a territorial competition regime is a way to systematically define a local production system.

Beyond public regulations: the structuring capacities of sectoral communities
The European dairy sector is known for having been highly regulated from 1968 to 2008. However, we have shown the spatial diversity of the structuring of milk production, collection, processing and exchange. Within a similar set of European regulations, French and German, and even Northern and Southern German, dairy farmers experienced contrasting conditions (price level and stability but also productive solutions) in accessing dairy markets. The study has emphasized that not only public regulations (quotas, administered prices, standards) but also community regulations contribute to market stabilization. Sectoral communities, through the elaboration of governance structures (professional, union or interbranch) and standards, act both as a permissive instance and as a resource centre for dairy enterprises. This finding corroborates Boyer and Freyssenet's (2000) analysis of the automotive industry. It extends the challenge of polycentric governance (Ostrom, 2010) from natural to economic resources.
The present study shows that coherent articulation between public and community regulations also matters for economic resources and intangible property. The evolution of public regulations (the liberalization of dairy policy) and the change in reasonable values (e.g., environmental sustainability) have exerted pressures on the industrial set of resources. Due to market liberalization, the framing of milk transactions (e.g., volume, quality and price settings) has shifted from a centralized negotiation between public actors and unions over the rules of trade (intervention prices, quotas and, later, subsidy allocation rules) to decentralized and fragmented negotiations between private organizations, that is, dairy firmsmore or less concentrated and diversifiedand farmersmore or less organized into producers' organizations. The changes in public standards and quality conventions correspond to public and community adjustments to a change in reasonable values.
4.3. Beyond state rescaling: the role of specific quality policy As in other sectors, the change in public policy instruments has been accompanied by a change in the scale of public intervention, from macro-instruments that aimed to stabilize the European market (quotas, administrative prices, and threshold standards) to meso-instruments (sectoral or environmental contracts) that attempted to mitigate the effect of instability in accordance with the subsidiarity principle.
The comparison of the French and German dairy sectors' adaptations confirms that decentralization favours the territorial revamping of productive capacities, but the orientation of sectoral public policy plays a role as well. In Germany, the regional differentiation of the competition regime benefited from the contrasting orientation of the Länder agricultural policy, but the historical regional structuring of collective productive forces played a synergetic role. In France, the CAP reforms and the rural development programme, which are giving more say to European regions in agricultural policy, were not sufficient to trigger new territorial compromise to counter liberalization (Trouvé & Berriet-Solliec, 2010). The central state power and the national structuring of the dairy profession have promoted a search for national sectoral solutions, as shown by the upgrading of generic milk standards for extended national and international markets. However, the strength of the specific quality food policy created opportunities for local differentiation of competition. This finding suggests that decentralization is not the only way to promote regional adaptive capacities: a public policy in favour of specific production modes could favour regional autonomy by supporting territorial differentiation of competition regimes.
4.4. Territorial institutions may be primary in the case of a territorial competition regime In Germany, the adjustment to the neoliberal turn took the form of regional differentiation of the competition regime, leading to spatially contrasting but rather clear conditions for farmers to access the market: intensification and concentration in Lower Saxony and diversification and quality upgrade in Bavaria. The strength of the French industrial regime was its strong sectoral coordination. With liberalization, farmers lost their national negotiation capacity and did not gain regional capacity (emerging producers' organizations are not regional). Only farmers engaged in specific quality chains benefited from stable and rather remunerative prices (Bouttes, 2018), notably as they managed to adjust their specific conception of control and governance structures to the new context (Dervillé & Allaire, 2014). Regional differentiation of the competition regimethe emergence of specific market institutionsappears to be a way to support such a specific regional development path. The French (local) and German (regional) territorial differentiation of the competition regime reveals that territorial institutions might be primary when they support a specific innovation capacity and territorial reputation at the origin of remunerative productive solutions. The territory is not always associated with an administrative boundary but rather corresponds to the intermediary (i.e., subnational) level of supply chains and market building. The capacity of French (local) and German (regional) territorial competition regimes to adjust to European dairy market liberalization suggests that reflexive governance structures could prevent lock-in.

CONCLUSIONS
Owing to a consistent but contextualized definition of market institutions, the competition regime framework allows the multiscale dimensions of the sectoral dynamics of value creation and distribution to be characterized. The analysis indicates that these dynamics result from a combination of private, public and collective actions that coevolve over time. This institutional approach allows us to analyse the neoliberal turn through extended means: the elimination of non-competitive firms is not the only issue. The pressure placed on sectoral and regional innovation capacity must also be addressed: business models, production standards and governance structures are either transformed or become dysfunctional. The framework that we proposed can be used to identify the coevolution of public and community regulations. The study demonstrates that territorial institutions can be key contributors to sectoral dynamics when regional players (public, private and collective) create, pool and sustainably manage resources. This goal is achieved not only by integrating them into a wider market but also by creating a local means of competing that results in a regional competition regime. The regional collective capacities for innovation and the building of territorial reputation appear to be complementary. Therefore, the competition regime approach has interesting outcomes for action, as well as for research; focusing on the institutions that frame the spatial distribution of economic activities could enrich the economic geography.
year contract with a relatively high electricity feed-in price). The EEG was then modified in 2012 and 2015 to reduce the negative effects on the environment and the increase in land prices: capping the use of corn at 60%, providing incentives for smaller installations and employing a 10% price reduction (Torries 2016).