The effect of supply management on herd size in Alberta dairy

Timothy Richards, Scott R. Jeffrey

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


A supply management program limits the aggregate supply of a commodity, often through the use of marketable quota licenses. The static, aggregate welfare effects of supply controls are well known, but the farm-level, dynamic effects on dairy investment are not. A theoretical cost-of-adjustment model is used to show that supply management reduces the rate of quasi-fixed input adjustment at the farm level. In fact, when a quasi-fixed input is complementary to quota licenses, investment or disinvestment can be impaired to such an extent that the input moves away from the long-run equilibrium. As a result, overinvestment in this input can significantly reduce productivity growth.

Original languageEnglish (US)
Pages (from-to)555-565
Number of pages11
JournalAmerican Journal of Agricultural Economics
Issue number2
StatePublished - May 1997


  • Alberta
  • Dairy
  • Dynamic duality
  • Investment
  • Supply management

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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