Short-Run Beef Supply Response

Abstract

It is hypothesized that the frequently observed zero or negative supply elasticity for beef is not the result of poor data or faulty statistical analysis. Theoretical specification of supply functions for the separate components of beef slaughter-steers, cows, and heifers-leads to an expected positive sign for the supply elasticity of steer slaughter, and an expected negative sign for the supply elasticity of cow slaughter. For heifer slaughter the sign cannot be ascertained from a priori considerations. The empirical evidence from statistical analyses of time-series data is consistent with and confirms the theoretical expectations. Total beef slaughter was disaggre-gated into three major components-steers, heifers, and cows. The esti-mated parameters in the regressions imply positive elasticity for steers and negative elasticity for cows. Only the heifer equation seems unsatisfactory. The parameter estimates fluctuate widely with slight changes in the esti-mating equation. Also the high autocorrelation of the errors implies inade-quate specification of the heifer model.