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Modeling Beef Quality Heterogeneity

Published online by Cambridge University Press:  28 April 2015

Jayson L. Lusk  and
F. Bailey Norwood
Jayson L. Lusk
Affiliation:
Department of Agricultural Economics, Oklahoma State University, Stillwater, OK
F. Bailey Norwood
Affiliation:
Department of Agricultural Economics, Oklahoma State University, Stillwater, OK
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Abstract

The effects of various supply and demand shifts on beef price, quantity, and industry welfare have been widely studied under the assumption of beef quality homogeneity. In this paper, we construct a model of the beef sector that incorporates differences in beef quality. The model is used to analyze the effect of supply and demand shifts on changes in prices and quantities of high- and low-quality beef and changes in revenue accruing to producers of high- and low-quality beef. Model results indicate that supply and demand shocks have the potential to alter the average quality of beef on the market and the price premium charged for high-quality beef, which has important implications for retailers selling quality-differentiated beef and producers selling cattle on a grid.

Keywords

beefequilibrium displacement modelmultisector modelquality heterogeneityQ11Q18
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 37 , Issue 3 , December 2005 , pp. 603 - 618
Copyright
Copyright © Southern Agricultural Economics Association 2005

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