Guaranteed Price Adjustment and Market Stability in the United Kingdom: The Case of Beef and Milk

Martin Evans

American Journal of Agricultural Economics, 1974, vol. 56, issue 1, 26-37

Abstract: The dynamic properties of a producer-government interaction model are investigated to show why the United Kingdom's policy of regulating its agricultural markets by annually adjusting guaranteed prices failed to control persistent fluctuations in supplies, market prices, and subsidy costs of beef and milk during the fifties and sixties. The evidence suggests that governments' responses to undesired movements, particularly in potential milk supplies, were excessive in terms of the magnitudes and frequency of official price adjustments. This emphasized the cyclical tendencies in the beef-milk economy, which was also susceptible to the destabilizing effects of random milk yield variation.

Date: 1974
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