Overproduction of yearling thoroughbred racehorses

Rodgers, P. E. (2011) Overproduction of yearling thoroughbred racehorses. Economic Issues, 16 (1). pp. 53-64. ISSN 1363-7029

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Overproduction of yearling thoroughbred racehorses
The world market for unbroken yearling Thoroughbred racehorses has exhibited signs of overproduction for some years. This paper explains why, by extending the theory of monopolistic competition to a market for a group of heterogeneous products, ordered by quality, and characterised by perfect price discrimination. The industry demand curve is found to be the marginal revenue curve. The industry supply curve is shown to be downward-sloping and the absence of barriers to entry causes suppliers to continue to produce beyond the point which maximises the social rent. Thus intra-marginal losses are caused by a market failure.
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Abstract

The world market for unbroken yearling Thoroughbred racehorses has exhibited signs of overproduction for some years. This paper explains why, by extending the theory of monopolistic competition to a market for a group of heterogeneous products, ordered by quality, and characterised by perfect price discrimination. The industry demand curve is found to be the marginal revenue curve. The industry supply curve is shown to be downward-sloping and the absence of barriers to entry causes suppliers to continue to produce beyond the point which maximises the social rent. Thus intra-marginal losses are caused by a market failure.

Item Type:Article
Additional Information:The world market for unbroken yearling Thoroughbred racehorses has exhibited signs of overproduction for some years. This paper explains why, by extending the theory of monopolistic competition to a market for a group of heterogeneous products, ordered by quality, and characterised by perfect price discrimination. The industry demand curve is found to be the marginal revenue curve. The industry supply curve is shown to be downward-sloping and the absence of barriers to entry causes suppliers to continue to produce beyond the point which maximises the social rent. Thus intra-marginal losses are caused by a market failure.
Keywords:Product Differentiation, Demand Curve, Supply Curve, Horse racing, Race horses, Profit margins, Monopolistic competition, Economics
Subjects:D Veterinary Sciences, Agriculture and related subjects > D422 Equine studies
L Social studies > L100 Economics
L Social studies > L120 Microeconomics
L Social studies > L110 Applied Economics
Divisions:College of Social Science > Lincoln Business School
ID Code:4436
Deposited By: Philip Rodgers
Deposited On:21 Apr 2011 12:26
Last Modified:13 Mar 2013 08:59

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