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2006

Iowa State University

CARD Working Papers

Biosecurity

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Economies Of Feedlot Scale, Biosecurity, Investment, And Endemic Livestock Disease, David A. Hennessy Sep 2006

Economies Of Feedlot Scale, Biosecurity, Investment, And Endemic Livestock Disease, David A. Hennessy

CARD Working Papers

Infectious livestock disease creates externalities for proximate animal production enterprises. The distribution of production scale within a region should influence and be influenced by these disease externalities. Taking the distribution of the unit costs of stocking an animal as primitive, we show that an increase in the variance of these unit costs reduces consumer surplus. The effect on producer surplus, total surplus, and animal concentration across feedlots depends on the demand elasticity. A subsidy to smaller herds can reduce social welfare and immiserize the farm sector by increasing the extent of disease. While Nash behavior involves excessive stocking, disease effects ...