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Price Expectations and Supply Response in the Thoroughbred Yearling Market

Published online by Cambridge University Press:  28 April 2015

J. Shannon Neibergs  and
Richard Thalheimer
J. Shannon Neibergs
Affiliation:
Equine Industry Program, College of Business and Public Administration, University of Louisville, Louisville, Kentucky
Richard Thalheimer
Affiliation:
Equine Industry Program, College of Business and Public Administration, University of Louisville, Louisville, Kentucky
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Abstract

Limited information is available concerning price determination in the thoroughbred yearling market. A recursive model incorporating price expectations and biological constraints is used to estimate supply and demand functions for thoroughbred horses. Empirical results characterize a market with inelastic supply and elastic demand that converges to equilibrium under static conditions. Purses were identified as the most influential variable impacting price. Comparative statics illustrate the effectiveness of purses as a policy instrument for the thoroughbred industry. Federal tax policy also was found to have a significant impact on the decisions to breed or invest in thoroughbred yearlings.

Keywords

elasticityparimutuel horse racingprice determinationprice flexibilitypursesthoroughbredyearling
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 29 , Issue 2 , December 1997 , pp. 419 - 435
Copyright
Copyright © Southern Agricultural Economics Association 1998

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