Infectious Disease, Productivity, and Scale in Open and Closed Animal Production Systems
Economics, Center for Agricultural and Rural Development
Journal or Book Title
American Journal of Agricultural Economics
First Page or Article ID Number
Trade in feeder animals creates externalities when animal diseases can spread beyond the purchasing farm. If growers choose between open and closed production systems, then Nash equilibrium likely involves excessive trading. While first-best equilibrium involves market-wide adoption of either an open-trade or closed-farm system, equilibrium may entail heterogeneous systems. If so, then the feeder trade should be restricted. Supply response to an increase in marginal costs may be positive. Within a farm, infectious disease risk can create decreasing returns to scale when the technology is otherwise increasing returns. Contractual procurement and damage control technologies will likely increase scale in finishing.
L22, Q12, Q16
Hennessy, David A.; Roosen, Jutta; and Jensen, Helen H., "Infectious Disease, Productivity, and Scale in Open and Closed Animal Production Systems" (2005). Economics Publications. 247.