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A Note: A Clarification Of The Role Of Yield Uncertainty In Influencing Over-Quota Production

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  • Fraser, Rob W.

Abstract

The literature shows that the influence of yield uncertainty on production relative to quota is ambiguous in the case of a single market. This paper uses a two-market framework (quota market and secondary market) with multiplicative yield uncertainty to show that if over-quota production in the absence of yield uncertainty is profitable, then the presence of yield uncertainty is unambiguously a further stimulus to over-quota production. The analysis is discussed in the context of recent changes to the marketing arrangements for Western Australian potatoes.

Suggested Citation

  • Fraser, Rob W., 1995. "A Note: A Clarification Of The Role Of Yield Uncertainty In Influencing Over-Quota Production," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(2), pages 1-5, August.
    • Handle: RePEc:ags:ajaeau:22402
    DOI: 10.22004/ag.econ.22402
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    References listed on IDEAS

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    1. Alston, Julian M. & Quilkey, John J., 1980. "Insurance Milk," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(3), pages 1-8, December.
    2. R. M. Parish, 1962. "The Costs Of Protecting The Dairying Industry," The Economic Record, The Economic Society of Australia, vol. 38(82), pages 167-182, June.
    3. repec:bla:ecorec:v:62:y:1986:i:178:p:338-42 is not listed on IDEAS
    4. Alston, Julian M. & Freebairn, John W., 1988. "Producer Price Equalization," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), pages 1-34, December.
    5. Robert B. Borges & Walter N. Thurman, 1994. "Marketing Quotas and Random Yields: Marginal Effects of Inframarginal Subsidies on Peanut Supply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 809-817.
    6. R. W. Fraser, 1986. "Uncertainty and Production Quotas," The Economic Record, The Economic Society of Australia, vol. 62(3), pages 338-342, September.
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    Cited by:

    1. Hennessy, David A. & Wei, Wei, 2000. "Decisions and tradable production quota when yield is uncertain," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(2), pages 1-15.

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