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| Hennessy, David A.. |
| We develop a dynamic capital valuation model in which each farm can take an action with farm-varying cost to increase the probability of not contracting a disease. In the presence of infection externalities, circumstances are identified under which multiple equilibria exist and where the one involving the most extensive set of action takers is socially optimal. It is suggested that costly capital markets are one factor in determining the extent of endemic disease in a region. The introduction of frictions, such as dealing with a cumbersome veterinary public health bureaucracy, can enhance social welfare by encouraging precautionary biosecurity actions. Some technical innovations can reduce social welfare. The model is also extended to study a voluntary... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Biosecurity; Continuous time; Multiple equilibria; Nash behavior; Reinfection; Livestock Production/Industries. |
| Ano: 2005 |
URL: http://purl.umn.edu/18330 |
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| Hennessy, David A.. |
| Infectious livestock disease creates externalities for proximate animal production enterprises. The distribution of production scale within a region should influence and be influenced by these disease externalities. Taking the distribution of the unit costs of stocking an animal as primitive, we show that an increase in the variance of these unit costs reduces consumer surplus. The effect on producer surplus, total surplus, and animal concentration across feedlots depends on the demand elasticity. A subsidy to smaller herds can reduce social welfare and immiserize the farm sector by increasing the extent of disease. While Nash behavior involves excessive stocking, disease effects can be such that aggregate output declines relative to first-best. Disease... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Agricultural industrialization; Biosecurity; Inefficiency; Nash behavior; Overinvestment; Technology adoption; Livestock Production/Industries. |
| Ano: 2006 |
URL: http://purl.umn.edu/18623 |
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