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A NOTE: A CLARIFICATION OF THE ROLE OF YIELD UNCERTAINTY IN INFLUENCING OVER‐QUOTA PRODUCTION *
Author(s) -
Fraser Rob W.
Publication year - 1995
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1995.tb00549.x
Subject(s) - production (economics) , yield (engineering) , economics , multiplicative function , context (archaeology) , microeconomics , mathematics , mathematical analysis , paleontology , materials science , biology , metallurgy
The literature shows that the influence of yield uncertainty on production relative to quota is ambiguous in the case of a single market. This paper uses a two‐market framework (quota market and secondary market) with multiplicative yield uncertainty to show that if over‐quota production in the absence of yield uncertainty is profitable, then the presence of yield uncertainty is unambiguously a further stimulus to over‐quota production. The analysis is discussed in the context of recent changes to the marketing arrangements for Western Australian potatoes.