Specification of quota licenses as quasi‐fixed inputs in a multi‐variate flexible accelerator model of dynamic input adjustment reveals supply management's effect on Alberta dairy investment patterns and, thereby, on total factor productivity growth. Estimates of a dynamic dual model of Alberta dairy, using panel data from 1975–91, show that strong complementarity between cattle and quota licenses results in short‐run cattle adjustments that are opposite in direction from the long‐run adjustments. A model of total factor productivity growth under dynamic input adjustment shows that the distortions to cattle investment caused by investing in quota licenses adversely affects productivity growth. As a result, there is likely to be a significant understatement of single‐period estimates of the cost of supply management in the dairy sector.

Original languageEnglish (US)
Pages (from-to)421-434
Number of pages14
JournalCanadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie
Issue number3
StatePublished - Nov 1995

ASJC Scopus subject areas

  • Global and Planetary Change
  • Ecology
  • Animal Science and Zoology
  • Agronomy and Crop Science
  • Economics and Econometrics


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