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The Change in Price Elasticities in the U.S. Beef Cattle Industry and the Impact of Futures Prices in Estimating the Price Elasticities

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  • Jeong, Sei

Abstract

This paper estimates price elasticities in the U.S. beef cattle industry by using the data for the time period during December 1999 and June 2018. In addition to the adaptive model which was used by many previous studies this study also uses rational expectations model by using futures prices to consider the life cycle of growing cattle. The results show that fed cattle supply is more affected by consumption good criteria rather than capital goods criteria in the short term. The long run own price elasticity for fed cattle supply has increased a lot compared to the estimates from previous studies. It implies that producers’ low budget situation caused by several droughts has had a considerable impact on the cattle industry. The results for the feeder cattle demand are consistent with profit maximization behavior of the producers.

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Handle: RePEc:ags:n13419:309632
DOI: 10.22004/ag.econ.309632
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File URL: https://ageconsearch.umn.edu/record/309632/files/Jeong_NCCC-134_2019.pdf
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