RISK, UTILITY AND STOCKING RATE

A simple utility-based model of risky wool production is presented. Evaluation of the model indicates the effect on optimal stocking rate of changes in the degree of risk aversion, farm area, variable cost, fixed cost, wool cut, wool price, variance of wool price, climatic variability and tax rate. It is shown that the utility hypothesis implies a lower optimal stocking rate than does expected profit maximization and hence implies a discrepancy between private and public optimal resource use which it is suggested, might be mitigated by a progressive bounty on wool production.


Issue Date:
1971-04
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/22978
Published in:
Australian Journal of Agricultural Economics, Volume 15, Number 1
Page range:
20-35
Total Pages:
16




 Record created 2017-04-01, last modified 2017-04-04

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)