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AN APPRAISAL OF A BUFFER FUND SCHEME FOR BEEF: COMMENT

AN APPRAISAL OF A BUFFER FUND SCHEME FOR BEEF: COMMENT Australian Journal of Agricultural Economics, Vol. 22, No. 2 (August 1978), pp. 135-137 AN APPRAISAL OF A BUFFER FUND SCHEME FOR BEEF: COMMENT ROBERT A. BAIN Bureau of Agricultural Economics Parton’s paper [l] is a welcome addition to the debate on beef pricing proposals. However, it does contain some dubious assumptions and several important considerations are overlooked. The major assumptions relate to elasticities of demand. It is assumed (without supporting evidence) that the upper limit of the foreign elasticity of demand for beef is 2.0. But when the US import law is not operating and the US government is calling for higher imports, as in 1973, the elasticity of demand must in effect approach infinity at the f.0.b. level: Australia acts as a price-taker in this market. Parton’s major conclusions depend on the assumption that the domestic demand for beef is inelastic at low prices and elastic at high prices (a configuration implied by specification of demand by a linear function). Indeed, the gains to consumers would disappear if the demand function was of constant elasticity. Authors have differed on the question of the appropriate elasticity configuration. While Freebairn and Gruen [4, p.371 favoured a linear specification, Main et http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

AN APPRAISAL OF A BUFFER FUND SCHEME FOR BEEF: COMMENT

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References (1)

Publisher
Wiley
Copyright
Copyright © 1978 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/j.1467-8489.1978.tb00213.x
Publisher site
See Article on Publisher Site

Abstract

Australian Journal of Agricultural Economics, Vol. 22, No. 2 (August 1978), pp. 135-137 AN APPRAISAL OF A BUFFER FUND SCHEME FOR BEEF: COMMENT ROBERT A. BAIN Bureau of Agricultural Economics Parton’s paper [l] is a welcome addition to the debate on beef pricing proposals. However, it does contain some dubious assumptions and several important considerations are overlooked. The major assumptions relate to elasticities of demand. It is assumed (without supporting evidence) that the upper limit of the foreign elasticity of demand for beef is 2.0. But when the US import law is not operating and the US government is calling for higher imports, as in 1973, the elasticity of demand must in effect approach infinity at the f.0.b. level: Australia acts as a price-taker in this market. Parton’s major conclusions depend on the assumption that the domestic demand for beef is inelastic at low prices and elastic at high prices (a configuration implied by specification of demand by a linear function). Indeed, the gains to consumers would disappear if the demand function was of constant elasticity. Authors have differed on the question of the appropriate elasticity configuration. While Freebairn and Gruen [4, p.371 favoured a linear specification, Main et

Journal

The Australian Journal of Agricultural Resource Economics – Wiley

Published: Dec 12, 1978

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