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A Study on Estimating Animal Products Grading Fees

Author

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  • Ji, Inbae

Abstract

This study develops a supply and demand model to analyze the Animal Products Grading Service. The animal products grading service market is a monopoly because there is only a supplier, Korea Institute for Animal Products Quality Evaluation, but the market has a horizontal demand curve because animal products grading fees are fixed by a law. Total cost functions of the supplier are estimated to derive marginal cost functions and average cost functions for cattle and pig with grading cost data. The minimum costs of the supplier are 3,654 won for cattle and 702 won for pig while the equilibrium prices are 2,386 won for cattle and 453 won for pig. The willingness to pay for livestock grading fees are 2,191~2,218 won for cattle farm and 495~505 won for pig farm by estimating logit model with choice survey data. The optimal grading fees are estimated 2,200~2,500 won for cattle and 450~500 won for pig respectively and the optimal government support level is suggested 30~40% of total animal products grading cost for the Animal Products Grading Service.

Suggested Citation

  • Ji, Inbae, 2016. "A Study on Estimating Animal Products Grading Fees," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 39(2), June.
    • Handle: RePEc:ags:jordng:330694
    DOI: 10.22004/ag.econ.330694
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