Overproduction of Yearling Thoroughbred Horses
AbstractThe 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.
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Bibliographic InfoArticle provided by Economic Issues in its journal Economic Issues.
Volume (Year): 16 (2011)
Issue (Month): 1 (March)
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- Neibergs, J. Shannon & Thalheimer, Richard, 1997. "Price Expectations And Supply Response In The Thoroughbred Yearling Market," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(02), December.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- 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(03), December.
- Lansford, Notie H., Jr. & Freeman, David W. & Topliff, Donald R. & Walker, Odell L., 1998. "Hedonic Pricing of Race-Bred Yearling Quarter Horses Produced by Quarter Horse Sires and Dams," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 16(2).
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