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Overproduction of Yearling Thoroughbred Horses

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  • Philip Rodgers

Abstract

The world market for unbroken yearling Thoroughbred racehorses has exhibited signs of overproduction for some years. This paper explains why, by extending the theory of monopolistic competition to a market for a group of heterogeneous products, ordered by quality, and characterised by perfect price discrimination. The industry demand curve is found to be the marginal revenue curve. The industry supply curve is shown to be downward-sloping and the absence of barriers to entry causes suppliers to continue to produce beyond the point which maximises the social rent. Thus intra-marginal losses are caused by a market failure.

Suggested Citation

  • Philip Rodgers, 2011. "Overproduction of Yearling Thoroughbred Horses," Economic Issues Journal Articles, Economic Issues, vol. 16(1), pages 53-64, March.
    • Handle: RePEc:eis:articl:111drodgers
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    3. Leeson, Peter T. & Sobel, Russell S., 2008. "Costly price discrimination," Economics Letters, Elsevier, vol. 99(1), pages 206-208, April.
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    5. Neibergs, J. Shannon & Thalheimer, Richard, 1997. "Price Expectations and Supply Response in the Thoroughbred Yearling Market," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 419-435, December.
    6. Joan Robinson, 1969. "The Economics of Imperfect Competition," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15320-6, December.
    7. Neibergs, J. Shannon & Thalheimer, Richard, 1999. "An Economic Analysis Of The Effectiveness Of Thoroughbred Breeder/Owner Incentive Policies," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(3), pages 1-12, December.
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