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

  • Hennessy, David A.
  • Roosen, Jutta
  • Jensen, Helen H.

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.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/paper_11996.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11996.

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Date of creation: 15 Jul 2004
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Publication status: Published in American Journal of Agricultural Economics, November 2005, vol. 87, pp. 900-917
Handle: RePEc:isu:genres:11996
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
  2. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
  3. Skaggs, Rhonda K. & Acuna, Rene & Torell, L. Allen & Southard, Leland W., 2004. "Live Cattle Exports from Mexico into the United States: Where Do the Cattle Come From and Where Do They Go?," Choices, Agricultural and Applied Economics Association, vol. 19(1).
  4. Topkis Donald M., 1995. "Comparative Statics of the Firm," Journal of Economic Theory, Elsevier, vol. 67(2), pages 370-401, December.
  5. Richard Bennett, 2003. "The 'Direct Costs'of Livestock Disease: The Development of a System of Models for the Analysis of 30 Endemic Livestock Diseases in Great Britain," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 55-71.
  6. John Mclnerney, 1996. "Old Economics For New Problems -Livestock Disease: Presidential Address," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 295-314.
  7. Junwook Chi & Alfons Weersink & John A. VanLeeuwen & Gregory P. Keefe, 2002. "The Economics of Controlling Infectious Diseases on Dairy Farms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(3), pages 237-256, November.
  8. Geoffard, P.Y. & Philipson, T., 1995. "Rational Epidemics and their Public Control," DELTA Working Papers 95-15, DELTA (Ecole normale supérieure).
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