Macroeconomics Commons^™

Evaluating Reforms In Canadian Chicken Marketing Mechanisms Using A Linear-Quadratic Inventory Model, Abdessalem Abbassi, Jean-Philippe Gervais

abdessalem abbassi

Marketing institutions in supply managed industries are evolving due to broad globalization pressures. The output and sales decisions of chicken processing firms under two different pricing mechanisms are modeled using a linear-quadratic inventory model. Decision rules lead to structural equations that relate output and sales to their own lagged values, lagged inventories and lagged prices and cost indicators. A Generalized Method of Moments (GMM) estimator is applied to the system of equations. The null hypotheses no adjustment costs in processing and no role for inventories in marketing are rejected. We simulate the impacts of reforming the chicken pricing mechanism, moving …