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Optimal Agricultural Policy with Biotechnology: Bovine Somatotropin and the Dairy Sector


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


A control model of the U.S. dairy sector was constructed to determine optimal policy when bovine somatotropin is released. Social welfare defined as consumer plus producer surplus minus adjustment and net government costs was maximized. Control variables were the milk support price and government purchases of cows. Compared to previous simulation research where government policy and adoption were modeled exogenously, the results show that policy not overly disruptive to the dairy sector is possible.

Suggested Citation

  • Tauer, Loren W. & Kaiser, Harry M., 1990. "Optimal Agricultural Policy with Biotechnology: Bovine Somatotropin and the Dairy Sector," Staff Papers 121536, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudasp:121536
    DOI: 10.22004/ag.econ.121536

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    References listed on IDEAS

    1. Jeffrey T. LaFrance & Harry de Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 821-832.
    2. Kinnucan, Henry W. & Hatch, L. Upton & Molnar, Joseph J. & Venkateswaran, Meenakshi, 1990. "Scale Neutrality Of Bovine Somatotropin: Ex Ante Evidence From The Southeast," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(2), pages 1-12, December.
    3. Rausser, Gordon C & Freebairn, John W, 1974. "Estimation of Policy Preference Functions: An Application to U.S. Beef Import Quotas," The Review of Economics and Statistics, MIT Press, vol. 56(4), pages 437-449, November.
    4. Griliches, Zvi, 1980. "Hybrid Corn Revisited: A Reply," Econometrica, Econometric Society, vol. 48(6), pages 1463-1465, September.
    5. Mike Hinchy & Phil Simmons, 1983. "An Optimalā€Control Approach To Stabilising Australian Wool Prices," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 27(1), pages 44-72, April.
    6. Pindyck, Robert S., 1982. "The optimal phasing of phased deregulation," Journal of Economic Dynamics and Control, Elsevier, vol. 4(1), pages 281-294, November.
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    Cited by:

    1. Kaiser, Harry M., 1990. "Bovine Somatotropin and Milk Production: Potential Impacts for the U.S," Staff Papers 121538, Cornell University, Department of Applied Economics and Management.
    2. de Gorter, Harry & Nielson, David J. & Rausser, Gordon C., 1990. "The political economy of productive and predatory policies: a case study from agriculture," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0q9495xv, Department of Agricultural & Resource Economics, UC Berkeley.


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