Economic Rents Under Supply Controls with Marketable Quota

Bruce A. Babcock · William Foster

37 citations0/0 files storedAmerican Journal of Agricultural Economics

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Agricultural economics and policies Economics of Agriculture and Food Markets Agricultural Economics and Policy

Abstract

Abstract We analyze the distribution of economic rent between owners and renters of marketable production quotas and examine how this distribution changes with increases in marginal costs. While quota owners unambiguously lose because of a marginal cost increase, quota renters may gain, depending on whether the marginal cost shift is divergent, parallel, or convergent. Using output and input prices, county production quotas, and quota rental rate data, we estimate a marginal cost function for North Carolina flue‐cured tobacco to demonstrate how wage increases affect owners' and renters' welfare.

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1988A Model of Production with Supply Management for the Canadian Agricultural Sector

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1998The Potential for Increased Trade in Milk and Dairy Products between Canada and the United States under Trade Liberalization 1998The Simple Analytics of Transferable Production Quota: Implications for the Marginal Cost of Ontario Milk Production

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