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Modeling The U.S. Dairy Sector With Government Intervention

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  • Liu, Donald J.
  • Kaiser, Harry M.
  • Mount, Timothy D.
  • Forker, Olan D.

Abstract

An econometric framework for estimating a two-regime dairy structural system is presented. Failure to account for switching between regimes due to government price intervention raises the problem of selectivity bias. Further, since a structural system of equations is involved, the problem is not limited to the market associated with the intervention. Rather, bias from a single source can distort all equations in the system. The ramifications of not correcting for the bias in policy analyses are investigated.

Suggested Citation

  • Liu, Donald J. & Kaiser, Harry M. & Mount, Timothy D. & Forker, Olan D., 1991. "Modeling The U.S. Dairy Sector With Government Intervention," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-14, December.
    • Handle: RePEc:ags:wjagec:32602
    DOI: 10.22004/ag.econ.32602
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    References listed on IDEAS

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    1. Jeffrey T. LaFrance & Harry de Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 821-832.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Jean-Paul Chavas & Richard M. Klemme, 1986. "Aggregate Milk Supply Response and Investment Behavior on U.S. Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 55-66.
    4. Casler, George L., 1990. "Firm Level Agricultural Data Collected And Managed At The State Level," 1990 Conference, January 6-9, Albuquerque, New Mexico 260177, Regional Research Committe NC-181: Determinants of Farm Size and Structure.
    5. Novakovic, Andrew M., 1990. "Dairy Policy Issues and Options for the 1990 Farm Bill," Staff Papers 121531, Cornell University, Department of Applied Economics and Management.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Liu, Donald J. & Kaiser, Harry M. & Forker, Olan D. & Mount, Timothy D., 1989. "The Economic Implications of the U.S. Generic Advertising Program: An Industry Model Approach," Research Bulletins 183324, Cornell University, Department of Applied Economics and Management.
    8. Casler, George L., 1990. "Use of Firm Level Agricultural Data Collected and Managed at the State Level for Studying Farm Size Issues," Staff Papers 121548, Cornell University, Department of Applied Economics and Management.
    9. H. E. Doran & J. J. Quilkey, 1972. "Harmonic Analysis of Seasonal Data: Some Important Properties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(4_Part_1), pages 646-651.
    10. Casler, George L., 1990. "Firm Level Agricultural Data Collected and Managed at the State Level," Staff Papers 121532, Cornell University, Department of Applied Economics and Management.
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    Citations

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    Cited by:

    1. Kaiser, Harry M., 1999. "Impact of Generic Fluid Milk and Cheese Advertising on Dairy Markets, 1984-1998," Research Bulletins 122684, Cornell University, Department of Applied Economics and Management.
    2. Adachi, Kenji & Liu, Donald J., 2006. "Estimating Threshold Effects of Generic Fluid Milk and Cheese Advertising," 2006 Annual meeting, July 23-26, Long Beach, CA 21333, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Kaiser, Harry M., 1997. "Impact of National Generic Dairy Advertising on Dairy Markets, 1984-96," Research Bulletins 122805, Cornell University, Department of Applied Economics and Management.
    4. Kaiser, Harry M., 1995. "An Analysis of Generic Dairy Promotion in the United States," Research Bulletins 122997, Cornell University, Department of Applied Economics and Management.
    5. Kaiser, Harry M., 1997. "Impact Of National Generic Dairy Advertising On Dairy Markets, 1984-95," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(2), pages 1-11, December.
    6. Cornick, Jorge & Cox, Thomas L., 1992. "Endogenous Switching Systems: Issues, Options, and Application to the U.S. Dairy Sector," Staff Papers 200565, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    7. Kaiser, Harry M., 2000. "Impact of Generic Fluid Milk and Cheese Advertising on Dairy Markets," Research Bulletins 122670, Cornell University, Department of Applied Economics and Management.
    8. Kaiser, Harry M. & Forker, Olan D., 1993. "Analysis Of Generi," Research Bulletins 123010, Cornell University, Department of Applied Economics and Management.
    9. Kaiser, Harry M., 1993. "An Analysis of Alternatives to the Dairy Price Support Program," Research Bulletins 123016, Cornell University, Department of Applied Economics and Management.
    10. Bailey, Kenneth W., 2009. "Documentation of a Dynamic and Simultaneous Econometric Model of the U.S. Dairy Industry," Staff Paper Series 48653, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    11. Kaiser, Harry M., 1998. "Impact of National Generic Dairy Advertising on Dairy Markets, 1984-97," Research Bulletins 122690, Cornell University, Department of Applied Economics and Management.
    12. Bailey, Kenneth W., 2000. "Evaluating The Economic Impacts Of Regional Milk Pricing Authorities: The Case Of Dairy Compacts," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), pages 1-12, October.

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