This article discusses supply response for milk in California with the emphasis on the impact of profitability of milk production. Profitability variables are specified as profit margin per cow due to the availability of cost of production data. California production is disaggregated into five regional response equations for market (Grade A) milk and an equation for manufacturing milk (Grade B). Econometric results for larger, more specialized dairies indicate very inelastic responses and long production lags. Results for smaller, less specialized dairies indicate elastic responses and somewhat shorter lags.
