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Risk, Utility And Stocking Rate

Author

Listed:
  • McArthur, I.D.
  • Dillon, John L.

Abstract

A simple utility-based model of risky wool production is presented. Evaluation of the model indicates the effect on optimal stocking rate of changes in the degree of risk aversion, farm area, variable cost, fixed cost, wool cut, wool price, variance of wool price, climatic variability and tax rate. It is shown that the utility hypothesis implies a lower optimal stocking rate than does expected profit maximization and hence implies a discrepancy between private and public optimal resource use which it is suggested, might be mitigated by a progressive bounty on wool production.

Suggested Citation

  • McArthur, I.D. & Dillon, John L., 1971. "Risk, Utility And Stocking Rate," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 1), pages 1-16, April.
  • Handle: RePEc:ags:ajaeau:22978
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    File URL: http://ageconsearch.umn.edu/record/22978/files/15010020.pdf
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    Citations

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    Cited by:

    1. Mill, Stephen J. & Longworth, John W., 1975. "Stochastic-Computerized-Activity-Budgeting For Sheep Enterprises," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 2), pages 1-11, August.
    2. Jackson, Ron, 1975. "Decision Analysis And Farm Management: The Need For A New Perspective," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 03), pages 1-5, September.
    3. Anderson, Jock R. & Griffiths, William E., 1982. "Production Risk And Efficient Allocation Of Resources," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 3), pages 1-7, December.
    4. John W. Freebairn, 1973. "The Value Of Information Provided By A Uniform Grading System," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 17(2), pages 127-139, August.
    5. Anderson, Jock R., 1979. "Impacts of Climatic Variability in Australian Agriculture: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 03), pages 1-31, December.
    6. Quaas, Martin F. & Baumgartner, Stefan & Becker, Christian & Frank, Karin & Muller, Birgit, 2007. "Uncertainty and sustainability in the management of rangelands," Ecological Economics, Elsevier, vol. 62(2), pages 251-266, April.
    7. Passmore, J.G. & Brown, Colin G., 1991. "Analysis Of Rangeland Degradation Using Stochastic Dynamic Programming," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 2), pages 1-27, August.
    8. Anderson, Jock R., 1971. "Guidelines for Applied Agricultural Research: Designing, Reporting and Interpreting Experiments," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 03), pages 1-12, September.
    9. Tisdell, Clement A., 1973. "Certainty Equivalence and Bias in the Management of Production," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 04), pages 1-13, December.

    More about this item

    Keywords

    Livestock Production/Industries;

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