Abstract
A demand function for grazing on western public rangelands is estimated. Since the federal government sets the grazing fee and rations the quantity of Animal Unit Months (AUMs), a disequilibrium market model is developed. The estimate of own-price elasticity of demand (-0.178) suggests a 0.82 percent revenue gain for a 1 percent fee increase. Results show that most western states experienced excess supply of AUMs since the mid-1980s, suggesting a relatively high fee. The levels of demand and effective supply vary substantially across states; this implies that state- or region-specific factors should be incorporated in setting the grazing fee.
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