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Negative Milk Supply Response Under Constrained Profit Maximizing Behavior

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  • Tauer, Loren W.
  • Kaiser, Harry M.

Abstract

A conceptual model is formulated that shows that a downward sloping supply function may exist for a profit maximizing firm facing a cash-flow constraint. The necessary requirement is that at least one factor must be a non-cash input. The model is tested using analysis of variance on two groups of producers from farm record data, one group facing a binding budget constraint the other group not. The results indicate that farms facing a cash flow constraint increase output more than farms not restricted by a cash flow constraint in response to a price decrease.

Suggested Citation

  • Tauer, Loren W. & Kaiser, Harry M., 1988. "Negative Milk Supply Response Under Constrained Profit Maximizing Behavior," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 17(2), October.
  • Handle: RePEc:ags:nejare:28844
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    File URL: http://purl.umn.edu/28844
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    Cited by:

    1. Zdenko Stefanides & Loren W. Tauer, 1999. "The Empirical Impact of Bovine Somatotropin on a Group of New York Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 95-102.
    2. St├ęphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2006. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 351-364.

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    Keywords

    Livestock Production/Industries;

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