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The Economic Impact Of Bgh On The New York State Dairy Sector: Comparative Static Results

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  • Magrath, William B.
  • Tauer, Loren W.

Abstract

The price and quantity effects of a forthcoming biotechnology product, bovine growth hormone (bGH), are explored in a simple partial equilibrium model. The model is based on previous theoretical work on technological change but is developed in terms of a sector output. A particular output curve is estimated using data from a random sample of New York State dairy farms. Information on the farm level production effects of bGH is used to shift the output curve and to solve for equilibrium levels of price and output. The model projects the bGH may lead to the exit of 5,400 New York dairy farms and a 20 percent reduction in herd size. Consumers will benefit from an approximately 30 percent drop in milk price. The effect on gradual diffusion of bGH on farm numbers if considered. To accommodate this technology policies encouraging an orderly transfer of resources out of the dairy sector should be examined.

Suggested Citation

  • Magrath, William B. & Tauer, Loren W., 1986. "The Economic Impact Of Bgh On The New York State Dairy Sector: Comparative Static Results," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 15(1), pages 1-8, April.
    • Handle: RePEc:ags:nejare:28882
    DOI: 10.22004/ag.econ.28882
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    References listed on IDEAS

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    1. Masakatsu Akino & Yujiro Hayami, 1975. "Efficiency and Equity in Public Research: Rice Breeding in Japan's Economic Development: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(4), pages 734-735.
    2. George, P.S. & King, Gordon A., 1971. "Consumer Demand for Food Commodities in the United States with Projections for 1980," Monographs, University of California, Davis, Giannini Foundation, number 11936, December.
    3. Ippolito, Richard A & Masson, Robert T, 1978. "The Social Cost of Government Regulation of Milk," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 33-65, April.
    4. Masakatsu Akino & Yujiro Hayami, 1975. "Efficiency and Equity in Public Research: Rice Breeding in Japan's Economic Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(1), pages 1-10.
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    Cited by:

    1. Caswell, Margriet F. & Fuglie, Keith O. & Klotz, Cassandra A., 1994. "Agricultural Biotechnology: An Economic Perspective," Agricultural Economic Reports 262025, United States Department of Agriculture, Economic Research Service.
    2. repec:ilo:ilowps:265060 is not listed on IDEAS
    3. Otero G., 1989. "Industry-university relationship and biotechnology in the dairy and sugar industries: contrast between Mexico and the United States," ILO Working Papers 992650603402676, International Labour Organization.
    4. Kaiser, Harry M., 1992. "Market Impacts Of Bovine Somatropin: A Supply And Demand Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 24(1), pages 271-282, July.
    5. Kaiser, Harry M., 1990. "Bovine Somatotropin and Milk Production: Potential Impacts for the U.S," Staff Papers 121538, Cornell University, Department of Applied Economics and Management.
    6. Fallert, Richard & McGuckin, Tom & Betts, Carolyn & Bruner, Gary, 1987. "bST and the Dairy Industry: A National, Regional, and Farm-Level Analysis," Agricultural Economic Reports 308035, United States Department of Agriculture, Economic Research Service.
    7. White, Gerald B., 1988. "Changing Conditions And Emerging Issues For Agricultural Production In The Northeast," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 17(2), pages 1-12, October.

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    Keywords

    Livestock Production/Industries;

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