Between a Cap and a Higher Price: The Dairy Quota Trilemma
| dc.creator | Chernoff, Alex W. | |
| dc.date | 2017-04-01T14:02:16Z | |
| dc.date.accessioned | 2026-07-09T07:54:08Z | |
| dc.description | The system of supply management in the Canadian dairy sector requires that farmers acquire quota to produce milk. In Canada's largest dairy producing province, Quebec, a ceiling on the price of quotas has been in effect since 2007. Previous research established that the use of quota price ceilings create a new source of inefficiency in the Canadian dairy sector. An alternative method for lowering quota prices is to lower the rent from quotas through lowering the farm price of milk. I determine the magnitude of the decrease in the farm price of milk that would be required to reduce the valuation of Quebec dairy quotas to the current price ceiling of $25,000 per unit. Accomplishing this task requires modeling the implicit valuation of quotas during the price ceiling era. Starting from a dynamic model of the demand for quotas, I develop an econometric model to estimate producers' discount factor. Using my econometric results and the modeled equilibrium price, I estimate the price of dairy quotas over the period 1993-2010. In 2010, I estimate that dairy quotas in Quebec would have traded at a price of $31,955 in the absence of the price ceiling. My results indicate that lowering the valuation of quotas to $25,000 per unit would have required an 11.83% reduction in the farm price of milk. | |
| dc.identifier | doi:10.22004/ag.econ.165804 | |
| dc.identifier | https://ageconsearch.umn.edu/record/165804/files/CATPRN%20Working%20Paper%2013-01%20Chernoff%20final.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/165804 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/593442 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/165804 | |
| dc.title | Between a Cap and a Higher Price: The Dairy Quota Trilemma | |
| dc.type | Text |