Premium
Guaranteed Price Adjustment and Market Stability in the United Kingdom: The Case of Beef and Milk
Author(s) -
Evans Martin
Publication year - 1974
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1239344
Subject(s) - subsidy , economics , yield (engineering) , government (linguistics) , agricultural economics , control (management) , agriculture , monetary economics , market economy , ecology , linguistics , philosophy , materials science , management , biology , metallurgy
Abstract The dynamic properties of a producer‐government interaction model are investigated to show why the United Kingdom's policy of regulating its agricultural markets by annually adjusting guaranteed prices failed to control persistent fluctuations in supplies, market prices, and subsidy costs of beef and milk during the fifties and sixties. The evidence suggests that governments' responses to undesired movements, particularly in potential milk supplies, were excessive in terms of the magnitudes and frequency of official price adjustments. This emphasized the cyclical tendencies in the beef‐milk economy, which was also susceptible to the destabilizing effects of random milk yield variation.