Modeling the Supply Response of Supply‐Managed Industries: A Review of Issues

Moschini, GianCarlo

doi:10.1111/j.1744-7976.1989.tb03361.x

Cited by 13 publications

(6 citation statements)

References 15 publications

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“…(1) can be derived from a single output, static model under the assumption of competitive markets (Moschini 1989;Babcock and Foster 1992). When quota is rented, the rental value of quota is observable and the marginal cost can be derived directly.…”

Section: Previous Approaches To Estimating Marginal Cost: Anmentioning

confidence: 99%

“…Consequently, the marginal cost of production is not observable. This creates serious problems in conducting welfare analysis of these regulated markets and in making assessments of their regional and international competitiveness (Barichello 1981;Forbes et al 1982;Veeman 1982;Schmitz 1983;Moschini 1989;Graham et al 1990;Ewasechko and Horbulyk 1994;Schmitz and Schmitz 1994;Lambert et al 1995;Meilke et al 1996). Lambert et al suggested that removing interprovincial trade barriers would shift milk production from Ontario to Quebec, while Ewasechko and Horbulyk concluded that Quebec would reduce its milk production.…”

Section: Introductionmentioning

confidence: 99%

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The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production

Chen

Meilke

1998

Canadian J Agri Economics

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Using a competitive dynamic optimization model, the difference between unused and used industrial milk quota values is shown to give an exact measure of the annual rental rate of production quota. Knowledge of the rental rate of production quota and output price can be used to impute the marginal cost of industrial milk production. However, if there is a transfer tax on production quota sales, the imputation of the equilibrium rental value of quota depends on the elasticity of demand and supply for quota as well as the level of the transfer assessment. The marginal cost of Ontario milk production is estimated for each year from 1980–81 to 1994–95, based on unused and used quota values. However, the imputed marginal cost estimates are not totally satisfactory. The results suggest that caution should be exercised in using the difference between unused and used quota prices as a measure of the rental rate of industrial milk production quota.

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Section: Previous Approaches To Estimating Marginal Cost: Anmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production

Chen

Meilke

1998

Canadian J Agri Economics

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“…Comparison between 14and 15reveals that the answer depends on the relative sizes of PQA and PQQ' These, in tum, depend on the where ' A measures the extent of departure from the marginal cost pricing caused by regulation." Equation (12) is a standard result of a production model under quota (Moschini 1989;Babcock and Foster 1992;Chen and Meilke 1998). 'A can thus be interpreted as the rental rate of milk production quota.…”

Section: The Importance Of Function Formmentioning

confidence: 99%

Regulation, Market Power, and Advertising Effectiveness

Chen¹,

Weerahewa

1998

Agric. resour. econ. rev.

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Using the case of Canadian dairy industry, this paper investigates the farm level effectiveness of generic advertising in two vertically related markets under government regulation and oligopolistic power. Comparative static analysis indicates that an increase in advertising may either increase or decrease the farm level profit when the processing industry is oligopolistic. When advertising leads to an increase in the farm level profit under the oligopolistic processing industry, the size of this effect may be more than, less than, or the same as that under perfect competition. Specifications of the retail demand function play an important role in determining both the direction and magnitude of the effect of advertising on the farm level profit under the oligopolistic processing industry. The simulation results of the Canadian butter industry illustrate that the magnitude of the bias caused by an erroneous assumption regarding the market structure could be significant.

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“…Microeconomies of supply under quota is weil documented in the literature. Moschini (1988Moschini ( , 1989, Squires (1992), Fulginiti and Perrin (1993), and Guyomard and Mahé (1993), for example, provide a clear presentation of the modeiling of technology under quota. Montgomery (1972), Burreil (1989), Babcock and Foster (1992), and Rucker et al (1993), for example, discuss the economics of a competitive market for quotas.…”

Section: Economie Aspects Of Sugar Quota Transfer In the Eu I) Basic mentioning

confidence: 99%

Quota mobility in the European sugar regime

Bureau¹,

Guyomard²,

Morin³

et al. 1997

European Review of Agricultural Economics

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We develop an analytical framework allowing to evaluate the consequences of a market of quota rights in the European Union sugar sector. The three particularities of the sugar regime, i.e., the distinction between "A" and "B" quotas, the levy mechanism and the possibility to produce "c" sugar at world priee, are modelled. The empirical objective is to assess how cross-border quota transferability would influence production in the various regions of the European Union. It appears that roughly 46 % of the production could be reallocated. Some of the sugar production is Iikely to shift from Southem Europe and the Benelux mainly towards France, Germany and Denmark. However, a large amount of transfer would take place between producers of different regiDns in the same country.

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Modeling the Supply Response of Supply‐Managed Industries: A Review of Issues

Cited by 13 publications

References 15 publications

The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production

The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production

Regulation, Market Power, and Advertising Effectiveness

Quota mobility in the European sugar regime

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