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Editor's choice Component supply responses in dairy production

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  • Daniel Muluwork Atsbeha
  • Dadi Kristofersson
  • Kyrre Rickertsen

Abstract

Under multiple component pricing schemes, the price of milk depends on its content of components such as fat, protein and lactose. A theoretical model of component supply under tradable quota regime is developed. A system of output supply and input demand equations is then derived and estimated for a panel of Icelandic dairy farms. Results show that milk component supply responds to price incentives in the short-run despite rigidities in component production technology. The own-price supply elasticities of fat and protein are 0.26 and 0.23 in the quota milk market and 0.02 and 0.25 in the surplus milk market, respectively.

Suggested Citation

  • Daniel Muluwork Atsbeha & Dadi Kristofersson & Kyrre Rickertsen, 2016. "Editor's choice Component supply responses in dairy production," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(2), pages 193-215.
    • Handle: RePEc:oup:erevae:v:43:y:2016:i:2:p:193-215.
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    File URL: http://hdl.handle.net/10.1093/erae/jbv019
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    Cited by:

    1. Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    2. Kosar, Nataliia & Kuzo, Nataliia & Binda, Jacek & Hayvanovych, Nataliya & Pytulyak, Nataliya, 2022. "Modeling of the factors influencing the dairy market in Ukraine," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(3), September.

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