A COST-BASED MODEL OF SEASONAL PRODUCTION, WITH APPLICATION TO MILK POLICY

Milk production is seasonal in many European countries. While quantity seasonality poses capacity management problems for dairy processors, a European Union policy goal is to reduce price seasonality. After developing a model of endogenous seasonality, we study the effects of three E.U. policies on production decisions. These are private storage subsidies, production removals, and production quotas. When cost functions are seasonal in a specified way, then arbitrage opportunities interact with storage subsidies to reduce both price and consumption seasonality. But production seasonality likely increases because storage subsidies promote temporal market integration. Conditions are identified under which product market interventions increase quantity seasonality.


Issue Date:
2003
Publication Type:
Working or Discussion Paper
Record Identifier:
https://ageconsearch.umn.edu/record/18587
PURL Identifier:
http://purl.umn.edu/18587
Total Pages:
31
Series Statement:
CARD Working Paper 03-WP 323




 Record created 2017-04-01, last modified 2018-01-22

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)