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Decomposing The Variance Of Gross Revenue Into Demand And Supply Components

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  • Piggott, Roley R.

Abstract

Some recent analyses relating to gross revenue instability have used a procedure for decomposing the variance of gross revenue into components attributable to price variability, quantity variability and interaction between these. This paper offers some criticisms of the procedure and outlines an alternative procedure which divides the variance of gross revenue into components due to demand variability, supply variability and interaction between these. The procedure is used to investigate the causes of instability in quarterly beef revenues in the Australian beef industry. Since demand and supply variability are both important contributors to beef revenue instability, direct market intervention to stabilise beef industry revenues would be a complex and risky task.

Suggested Citation

  • Piggott, Roley R., 1978. "Decomposing The Variance Of Gross Revenue Into Demand And Supply Components," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 22(2-3), pages 1-13, August.
    • Handle: RePEc:ags:ajaeau:22725
    DOI: 10.22004/ag.econ.22725
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    References listed on IDEAS

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    1. Powell, Alan A., 1960. "Production And Income Uncertainty In The Wool Industry: An Aggregative Approach," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 4(1), pages 1-11, July.
    2. James P. Houck, 1973. "Some Aspects Of Income Stabilization For Primary Producers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 17(3), pages 200-215, December.
    3. Oscar R. Burt & Robert M. Finley, 1968. "Statistical Analysis of Identities in Random Variables," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(3), pages 734-744.
    4. Arthur S. Goldberger, 1970. "On the Statistical Analysis of Identities: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 52(1), pages 154-155.
    5. Houck, James P., 1973. "Some Aspects Of Income Stabilization For Primary Producers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 17(3), pages 1-16, December.
    6. Oscar R. Burt & Robert M. Finley, 1970. "On the Statistical Analysis of Identities: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 52(1), pages 155-156.
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    Cited by:

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    3. Russell, James R. & Arap Rop, Isaac K. & Henneberry, David M., 1989. "Sources of Producer Income Instability in Kenya," 1989 Occasional Paper Series No. 5 197712, International Association of Agricultural Economists.
    4. Thompson, Robert S., 2020. "Measuring the Relationship between Price and Yield," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304188, Agricultural and Applied Economics Association.

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    Keywords

    Demand and Price Analysis;

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