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

Loren W. Tauer

No 127151, Working Papers from Cornell University, Department of Applied Economics and Management

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.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Pages: 25
Date: 2004-10
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: 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)
Working Paper: When to Get In and Out of Dairy Farming: A Real Option Analysis (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:127151

DOI: 10.22004/ag.econ.127151

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