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Infectious Disease, Productivity, and Scale in Open and Closed Animal Production Systems

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  • Helen H. Jensen

Abstract

Trade in feeder animals creates externalities when animal diseases can spread beyond the purchasing farm. If growers choose between open and closed production systems, then Nash equilibrium likely involves excessive trading. While first-best equilibrium involves market-wide adoption of either an open-trade or closed-farm system, equilibrium may entail heterogeneous systems. If so, then the feeder trade should be restricted. Supply response to an increase in marginal costs may be positive. Within a farm, infectious disease risk can create decreasing returns to scale when the technology is otherwise increasing returns. Contractual procurement and damage control technologies will likely increase scale in finishing. Copyright 2005, Oxford University Press.

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  • Helen H. Jensen, 2005. "Infectious Disease, Productivity, and Scale in Open and Closed Animal Production Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 900-917.
    • Handle: RePEc:oup:ajagec:v:87:y:2005:i:4:p:900-917
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2005.00777.x
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    References listed on IDEAS

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    Cited by:

    1. Benjamin M. Gramig & Richard D. Horan, 2011. "Jointly determined livestock disease dynamics and decentralised economic behaviour," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 393-410, July.
    2. David A. Hennessy, 2007. "Behavioral Incentives, Equilibrium Endemic Disease, and Health Management Policy for Farmed Animals," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 698-711.
    3. Hennessy, David A., 2012. "Economic Aspects of Agricultural and Food Biosecurity," Staff General Research Papers Archive 35015, Iowa State University, Department of Economics.
    4. Rouvière, Elodie, 2016. "Small is beautiful: firm size, prevention and food safety," Food Policy, Elsevier, vol. 63(C), pages 12-22.
    5. Laroche Dupraz, C. & Postolle, A., 2013. "Food sovereignty and agricultural trade policy commitments: How much leeway do West African nations have?," Food Policy, Elsevier, vol. 38(C), pages 115-125.
    6. Tong Wang & David A. Hennessy, 2015. "Strategic Interactions Among Private and Public Efforts When Preventing and Stamping Out a Highly Infectious Animal Disease," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 435-451.
    7. Carl Gaigné & Julie Le Gallo & Solène Larue & Bertrand Schmitt, 2011. "Does the regulation of manure land application work against agglomeration economies? Theory and evidence from the French hog sector," Working Papers SMART - LERECO 11-02, INRA UMR SMART-LERECO.
    8. Horan, Richard D. & Fenichel, Eli P. & Finnoff, David & Wolf, Christopher A., 2015. "Managing dynamic epidemiological risks through trade," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 192-207.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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