Cost-Based Model of Seasonal Production, with Application to Milk Policy, A
AbstractMilk production is seasonal in many European countries. While quantity seasonality poses capacity management problems for dairy processors, a European Union policy goal is to reduce price seasonality. After developing a model of endogenous seasonality, we study the effects of three E.U. policies on production decisions. These are private storage subsidies, production removals, and production quotas. When cost functions are seasonal in a specified way, then arbitrage opportunities interact with storage subsidies to reduce both price and consumption seasonality. But production seasonality likely increases because storage subsidies promote temporal market integration. Conditions are identified under which product market interventions increase quantity seasonality.
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Bibliographic InfoPaper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 03-wp323.
Date of creation: Jan 2003
Date of revision:
efficiency; market intervention; quota; stabilization; storage subsidies.;
Other versions of this item:
- David A. Hennessy & Jutta Roosen, 2003. "Cost-Based Model of Seasonal Production, with Application to Milk Policy, A," Center for Agricultural and Rural Development (CARD) Publications 03-wp323, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Hennessy, David A. & Roosen, Jutta, 2003. "Cost-Based Model of Seasonal Production, with Application to Milk Policy, A," Staff General Research Papers 10176, Iowa State University, Department of Economics.
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