The Impact of Quotas on the Optimal Adjustment of Milk Production at the Farm Level: A Comment

K Gary Grant

European Review of Agricultural Economics, 1989, vol. 16, issue 4, 515-22

Abstract: In a recent article, Rasmussen and Nielsen (1985) conclude that a quota-induced reduction in milk production occurs through a decrease in feed per cow and, only if this is insufficient, is there a reduction in the number of cows. Here it is shown that, in their model, unless the capacity of the stalls is a binding constraint, any reduction in feed per cow is of second-order importance and solely the result of the indivisibility of the cow input. Moreover, the connections between farm-level decisions and the short-run, industry equilibria implied by their model are examined. Copyright 1989 by Oxford University Press.

Date: 1989
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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