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INFECTIOUS DISEASE, PRODUCTIVITY, AND SCALE IN OPEN AND CLOSED ANIMAL PRODUCTION SYSTEMS AgEcon
Hennessy, David A.; Roosen, Jutta; Jensen, Helen H..
Comparative advantage motivates large trade flows in feeder animals throughout the world. Trade creates externalities when animal diseases can spread beyond the purchasing farm. When growers can choose between open and closed production systems, Nash equilibrium will likely involve socially excessive trading. Supply response to an increase in marginal costs may be positive. While first-best involves marketwide adoption of either an open-trade or closed-farm system, equilibrium may entail heterogeneous systems. If this is the case, then the feeder trade should be banned. Within a farm, we show how risk of infectious disease can create decreasing returns to scale when the technology is otherwise increasing in returns to scale. Control of disease risk...
Tipo: Working or Discussion Paper Palavras-chave: Feeder trade; Industrialization; Information; Nash equilibrium; Vertical integration; Welfare; Livestock Production/Industries.
Ano: 2004 URL: http://purl.umn.edu/18405
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