Modelling interdependent participation incentives: dynamics of a voluntary livestock disease control programme

Tong Wang and David Hennessy

European Review of Agricultural Economics, 2014, vol. 41, issue 4, 681-706

Abstract: With focus on seedstock herds selling replacements and a qualified class of diseases, this paper models producers' interdependent incentives to participate in a voluntary livestock disease control programme. Under strategic complementarity among participation decisions, momentum can build such that market premium for participation and participation rate increase sequentially. Non-participation, partial participation and full participation can all be Nash equilibria. Participation cost heterogeneity will dispose the outcome towards incomplete participation. We find plausible conditions under which temporary government subsidies cause tipping towards full participation. Applying parameters from the literature on Johne's disease, we illustrate factors that may affect participation.

Date: 2014
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