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The Effects of Supply Shifts on Producers' Surplus

Author

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  • Gay Y. Miller
  • Joseph M. Rosenblatt
  • Leroy J. Hushak

Abstract

Changes in the supply curve caused by technological improvements in production or changes in national policy may or may not benefit producers as a whole, depending on the type of shift in the supply curve. A structured analysis of different changes in the supply curve that model this situation is given, and the change in producers' surplus is examined depending on quantitative aspects of the supply and demand curves. For supply and demand curves that are linear or power functions, a small downward pivot of the supply curve will increase producers' surplus only if the equilibrium point is far enough into the elastic region of the demand curve, and any downward pivot of the supply curve will decrease producers' surplus if the equilibrium point is in the inelastic region of the demand curve. Similar results are obtained for the more general case of convex supply and demand curves.

Suggested Citation

  • Gay Y. Miller & Joseph M. Rosenblatt & Leroy J. Hushak, 1988. "The Effects of Supply Shifts on Producers' Surplus," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(4), pages 886-891.
    • Handle: RePEc:oup:ajagec:v:70:y:1988:i:4:p:886-891.
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    File URL: http://hdl.handle.net/10.2307/1241930
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    Cited by:

    1. David S Bullock & Marion Desquilbet & Klaus Salhofer & . American Agricultural Economics Association, 2000. "Economic effects of European GMO Labeling policy," Post-Print hal-02306126, HAL.
    2. Karls, Michael A. & Horowitz, John B. & Sesmero, Juan & Van Cott, T. norman, 2013. "Innovation, Parallel Shifts of Supply, and Welfare," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 14(1), pages 1-8.
    3. McVey, Marty Jay, 1996. "Valuing quality differentiated grains from a total logistics perspective," ISU General Staff Papers 1996010108000012326, Iowa State University, Department of Economics.
    4. Gardner, Bruce L., 2000. "International Trade And The Future Of American Agriculture," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(1), pages 1-14, March.
    5. Gardner, Bruce L., 1992. "Price Supports and Optimal Spending on Agricultural Research," Working Papers 197793, University of Maryland, Department of Agricultural and Resource Economics.
    6. Foster, William & Rausser, Gordon, 1989. "A Political-Economic Rationale for Coupled Welfare Transfer Policies," CUDARE Working Papers 198488, University of California, Berkeley, Department of Agricultural and Resource Economics.
    7. Karagiannis, Giannis & Furtan, William Hartley, 2002. "The Effects of Supply Shifts on Producers' Surplus: the Case of Inelastic Linear Supply Curves," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 3(1), pages 1-7, January.

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