Quote:
Originally Posted by krynski
So you acknowledge that if producers leave the industry, prices would go up?
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Of course, that is how supply and demand works. I think its exceedingly more likely that if you removed the quota system from preventing new entrants new entrants would increase though. Lowering prices.
Quote:
I know how cost of production models are built, and there is no extra cost for quota, that is not built into the model. If people want to spend their hard earned money on quota, then they are able to, but they are not paid extra so that they can buy quota- that is rediculous.
You point out that my post is inconsistent, so I must ask, if cows, equipment, feed, and land are detterents enough for most people not to get into dairy farming, then why are there so many people trying to do it, driving up the cost of quota?
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The answer to your last question refutes the statement in the first quoted sentence. The reason people are bidding so much for quota is that the quota enables them to earn above normal profits on their investment.
Or is your thesis that dairy farmers as a collective group are morons? Because that is the only other explanation for why quota prices would be high if the extra profits don't justify paying up for quota.