When to Get In and Out of Dairy Farming: A Real Option Analysis

Loren Tauer

Finance from EconWPA

Abstract: The Dixit entry/exit real option model, modified to accommodate a milk price support regime, was applied to the entry/exit decisions of New York dairy farmers. Results varied by farm size, but for the 500-cow farm the entry milk price is $19.09 and the exit milk price is $11.66 when farmers were allowed to continuously enter and exit the industry. With no option to ever return to dairy farming, the exit milk price falls to $10.00.

JEL-codes: G (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-cfn
Date: 2005-04-23
Note: Type of Document - pdf
View list of references

Downloads: (external link)
http://129.3.20.41/eps/fin/papers/0504/0504018.pdf (application/pdf)

Related works:
Working Paper: When to Get In and Out of Dairy Farming: A Real Option Analysis (2006)
Journal Article: When to Get In and Out of Dairy Farming: A Real Option Analysis (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0504018

Access Statistics for this paper

More papers in Finance from EconWPA
Series data maintained by EconWPA ().