Hostname: page-component-848d4c4894-mwx4w Total loading time: 0 Render date: 2024-06-27T07:09:47.936Z Has data issue: false hasContentIssue false
  • English
  • Français

Price Expectations and Supply Response in the Thoroughbred Yearling Market

Published online by Cambridge University Press:  28 April 2015

J. Shannon Neibergs  and
Richard Thalheimer
J. Shannon Neibergs
Affiliation:
Equine Industry Program, College of Business and Public Administration, University of Louisville, Louisville, Kentucky
Richard Thalheimer
Affiliation:
Equine Industry Program, College of Business and Public Administration, University of Louisville, Louisville, Kentucky
Get access Rights & Permissions [Opens in a new window]

Abstract

Limited information is available concerning price determination in the thoroughbred yearling market. A recursive model incorporating price expectations and biological constraints is used to estimate supply and demand functions for thoroughbred horses. Empirical results characterize a market with inelastic supply and elastic demand that converges to equilibrium under static conditions. Purses were identified as the most influential variable impacting price. Comparative statics illustrate the effectiveness of purses as a policy instrument for the thoroughbred industry. Federal tax policy also was found to have a significant impact on the decisions to breed or invest in thoroughbred yearlings.

Keywords

elasticityparimutuel horse racingprice determinationprice flexibilitypursesthoroughbredyearling
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 29 , Issue 2 , December 1997 , pp. 419 - 435
Copyright
Copyright © Southern Agricultural Economics Association 1998

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ali, M.M., and Thalheimer, R.. “Transportation Costs and Product Demand: Wagering on Parimutuel Horse Racing.” Appl. Econ. 29(1997):529-42.Google Scholar
The Blood-Horse. Annual Auction Review. Lexington KY: The Blood-Horse, Inc. Various issues, 1960-94.Google Scholar
The Blood-Horse. Annual Stallion Register. Lexington KY: The Blood-Horse, Inc. Various issues, 1960-94.Google Scholar
Buzby, J.C., and Jessup, E.L.. “The Relative Impact of Macroeconomic and Yearling-Specific Variables in Determining Thoroughbred Yearling Price.” Appl. Econ. 26(1994):1–8.Google Scholar
Chavas, J.P., and Klemme, R.. “Aggregate Milk Supply Response and Investment Behavior on U.S. Dairy Farms.” Amer. J. Agr. Econ. 68(1986):55–66.Google Scholar
Chen, D.T., and Dharmaratne, G.S.. “Farm Price Response to Supply Shocks: A Comparison of Alternative Inverse Demand Structural Models.” Rev. Agr. Econ. 18(1996):137-46.Google Scholar
Christiansen, E.M., and Cummings, W.E.. “The United States 1994 Gross Annual Wager.” Internat. Gaming and Wagering Bus. (1 August 1996):55–94.Google Scholar
Citibase Macroeconomic Database. Dexter MI: FAME Information Services, 1994.Google Scholar
Commerce Clearing House, Inc., Tax Law Editors. Standard Federal Tax Reports: 1993 Depreciation Guide. Chicago IL: Commerce Clearing House, Inc., 1993.Google Scholar
Ezekiel, M. “The Cobweb Theorem.” Quart. J. Econ. 52(1938):225-80.Google Scholar
Foster, K.A., and Burt, O.R.. “A Dynamic Model of Investment in the U.S. Beef-Cattle Industry.” J. Bus. and Econ. Statis. 11(1992):419-26.Google Scholar
Gulley, O.D., and Scott, F.A.. “Lottery Effects on Parimutuel Tax Revenues.” National Tax J. 42(1989):89–93.Google Scholar
Hall, R., and Jorgenson, D.. “Tax Policy and Investment Behavior.” Amer. Econ. Rev. 57(1967):391–414.Google Scholar
Hollingsworth, K. “More for Less.” Annual Auction Review, 1984. Lexington KY: The Blood-Horse, Inc., 1984.Google Scholar
Irwin, S.H., and Thraen, C.S.. “Rational Expectations in Agriculture? A Review of the Issues and the Evidence.” Rev. Agr. Econ. 16(1994):133-58.Google Scholar
The Jockey Club. 1995 Fact Book: A Guide to the Thoroughbred Industry in North America. New York: The Jockey Club, 1995.Google Scholar
Karungu, P., Reed, M., and Tvedt, D.. “Macroeconomic Factors and the Thoroughbred Industry.” J. Agr. and Appl. Econ. 25(1993):165-73.Google Scholar
Lawrence, R.G. “All About Purses.” Thoroughbred Times. Various issues.Google Scholar
Lawrence, R.G. “An Econometric Analysis of Changes in Quarter Horse Prices, 1950 Through 1967.” Unpub. Ph.D. dissertation, Texas A&M University, College Station, 1968.Google Scholar
Marfels, C. “Casino Gaming.” The Structure of American Industry, eds., Adams, W. and Brock, J.. Englewood Cliffs NJ: Prentice-Hall, Inc., 1995.Google Scholar
Pindyck, R.S., and Rubinfeld, D.L.. Economic Models and Economic Forecasts, 3rd ed. New York: McGraw-Hill, Inc., 1991.Google Scholar
Rosen, S. “Dynamic Animal Economics.” Amer. J. Agr. Econ. 69(1987):547-57.Google Scholar
Rosen, S., Murphy, K.M., and Scheinkman, J.A.. “Cattle Cycles.” J. Polit. Econ. 102(1994):468-92.Google Scholar
Simmons, S.A., and Sharp, R.. “State Lotteries' Effects on Thoroughbred Horse Racing.” J. Policy Analysis and Manage. 6(1987):446-48.Google Scholar
Stein, J.L. “Cobwebs, Rational Expectations, and Futures Markets.” Rev. Econ. and Statis. 74(1992):127-34.Google Scholar
Thalheimer, R., and Ali, M.M.. “The Demand for Parimutuel Horse Race Wagering and Attendance.” Manage. Sci. 41(1995a):129-43.Google Scholar
Thalheimer, R., and Ali, M.M.. “Exotic Betting Opportunities, Pricing Policies, and the Demand for Parimutuel Horse Race Wagering.” Appl. Econ. 27(1995b):689–703.Google Scholar
Thalheimer, R., and Ali, M.M.. “Intertrack Wagering and the Demand for Parimutuel Horse Racing.” J. Econ. and Bus. 74(1995c):369-83.Google Scholar
U.S. Department of Agriculture, Statistical Reporting Service. Agricultural Statistics. Washington DC: Government Printing Office. Various issues, 1960-94.Google Scholar
Whipple, G.D., and Menkhaus, D.J.. “Supply Response in the U.S. Sheep Industry.” Amer. J. Agr. Econ. 71(1989):126-35.Google Scholar