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The Demand for Inputs and Technical Change in the U.S. Dairy Manufacturing Industry

  • Wei Zhang and Julian M. Alston
Abstract

The dairy industry is of much interest worldwide because it has been subject to heavy government intervention. Central to the analysis of any dairy policy is a quantitative empirical understanding of the economic relationships in the industry. This paper models and measures the input demand relationships—especially, derived demand for farm milk as a processing input—and the rate and biases of technical change in the U.S. dairy manufacturing industry. Our estimates indicate that the Marshallian own-price elasticity of demand for farm milk is between −0.43 and −1.20. Estimates also indicate that technical change has been capital using and labor saving.

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Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Corresponding author
Correspondence: Wei Zhang, Connecticut CollegeBox 5576270 Mohegan AveNew London CT06320 USA ■ Phone: 860.439.2224 ■ Email: wei.zhang@conncoll.edu.
Footnotes
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We would like to thank the editor of the Journal, Todd Schmit, and two anonymous referees for their comments and suggestions. The work for this project was supported with funding from the Giannini Foundation of Agricultural Economics. All errors are our own. The views expressed are the authors’ and do not necessarily represent the policies or views of any sponsoring agencies.

Footnotes
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Agricultural and Resource Economics Review
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