Economic hysteresis and the effects of output regulation

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

Economic hysteresis, the continuation of a phenomenon after its initial cause has disappeared, represents an alternative theoretical explanation for the fixed-asset problem. When a set of fixed assets includes quota licenses, hysteresis in license investment leads to distortions that have not been measured in the policy analysis literature. A model of economic "friction" tests the effect of hysteresis in Alberta dairy investment. Estimates of investment functions show that desired investment (disinvestment) must be significantly greater (less) than zero before any action is taken. Because cattle and quota are often purchased together, the relatively long periods of no change in quota holdings that result from hysteresis cause similar periods in which herds neither grow nor contract.

Original languageEnglish (US)
Pages (from-to)1-17
Number of pages17
JournalJournal of Agricultural and Resource Economics
Volume21
Issue number1
StatePublished - Jul 1996

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hysteresis
economics
assets
policy analysis
econometric models
Alberta
friction
cattle
dairies
herds
effect
regulation
Hysteresis
Economics
testing
Fixed assets
License

Keywords

  • Alberta
  • Dairy
  • Dynamic duality
  • Fixed asset
  • Hysteresis
  • Option value
  • Supply management

ASJC Scopus subject areas

  • Aquatic Science

Cite this

Economic hysteresis and the effects of output regulation. / Richards, Timothy.

In: Journal of Agricultural and Resource Economics, Vol. 21, No. 1, 07.1996, p. 1-17.

Research output: Contribution to journalArticle

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