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Quality Premiums and the Competitive Firm's Production Decision


  • Hennessy, David A.
  • Devadoss, Stephen


The impact of price-quality schedule changes on the 'optimal input choice' of producers which subscribe to a minimum quality standard is investigated using the stochastic dominance method. In addition, the effects of a transition from a fixed price schedule to a quality-dependent price schedule are examined. The correlations between production technology, a minimum quality standard and price levels needed to ensure that total and marketed output remains the same are also discussed.

Suggested Citation

  • Hennessy, David A. & Devadoss, Stephen, 1995. "Quality Premiums and the Competitive Firm's Production Decision," Staff General Research Papers Archive 5262, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:5262

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    References listed on IDEAS

    1. Huffman, Wallace E & Lange, Mark D, 1989. "Off-Farm Work Decisions of Husbands and Wives: Joint Decision Making," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 471-480, August.
    2. Daniel M. Otto & Stanley R. Johnson & Helen H. Jensen & Sheila A. Martin, 1988. "Rural Economic Development Policies for the Midwestern States," Center for Agricultural and Rural Development (CARD) Publications 88-wp35, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Helen H. Jensen, 1982. "Analysis of Fringe Benefits for Nonmetropolitan versus Metropolitan Employee Compensation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(1), pages 124-128.
    4. Wallace E. Huffman, 1985. "Human Capital, Adaptive Ability, and the Distributional Implications of Agricultural Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 429-434.
    5. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
    6. Babcock, Bruce A. & Beghin, John C. & Mohanty, Samarendu & Fuller, Frank H. & Chaudhary, Sudhir & Fabiosa, Jacinto F. & Kovarik, Karen & Hart, Chad E. & Fang, Cheng & Kaus, Phillip J. & Naik, Manta & , 1999. "FAPRI 1999 World Agricultural Outlook," Staff Reports 32050, Food and Agricultural Policy Research Institute (FAPRI).
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