Current Agriculture, Food & Resource Issues
M. Doyon, C. Brodeur and J-P. Gervais
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Endnotes
1 We wish to thank Robert Romain, for providing valuable comments at the early stage of
this research, as well as an anonymous reviewer. The standard disclaimer about remaining
errors applies.
2 Note that fixed costs in (1) are normalized to zero. This assumption is convenient for two
reasons. First, given that output share is the relevant decision variable from the producers’
perspective, fixed costs have impacts in the analysis that cannot be distinguished from
initial wealth impacts in the current stochastic environment. It would be difficult to
pinpoint with confidence the fixed costs level that would fairly represent a large
proportion of Quebec dairy producers. Second, the per-unit nature of the profit function
would also require running simulations that are a function of the scale of production of
various dairy farms.
3 Note that total output of a dairy producer is determined by the size of the dairy cow herd;
thus monthly hectolitres of milk produced are constant. The analysis is thus confined to a
short-run perspective.
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