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Overproduction of Yearling Thoroughbred Horses

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  • Philip Rodgers

Abstract

The 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.

Suggested Citation

  • Philip Rodgers, 2011. "Overproduction of Yearling Thoroughbred Horses," Economic Issues Journal Articles, Economic Issues, vol. 16(1), pages 53-64, March.
    • Handle: RePEc:eis:articl:111drodgers
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    References listed on IDEAS

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    5. 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), pages 1-17.
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