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SUPPLY RESPONSE TO PRICE UNDER CERTAINTY, WITH REFERENCE TO THE UNITED KINGDOM EGG MARKET, 1954 TO 1966
Author(s) -
Robertson C. A.
Publication year - 1971
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1971.tb01728.x
Subject(s) - economics , price elasticity of supply , profit (economics) , price elasticity of demand , factor price , econometrics , agricultural economics , microeconomics
Hen egg production in the United Kingdom expanded throughout the 1950's and early 1960's in the face of successive reductions in the guaranteed price thus raising questions about the efficacy of the guaranteed price system as a production control mechanism. The objective of this analysis is to estimate the guaranteed price elasticity of supply of hen eggs over the twelve‐year period 1954 to 1966. Two models are used, a conventional linear form and a Nerlove type lagged model. The independent variables considered are the guaranteed price, the price of feed, and egg yield as a proxy for technology. The non‐lagged equation is the more satisfactory and gives an elasticity value of 1.66, suggesting that flock owners were highly sensitive to changes in the guaranteed price. This sensitivity tended to be obscured by producer eagerness to profit from technological advance, which was the predominant factor affecting the scale of egg production over the period.