Abstract
Despite the existence of over 2.5 million Quarter Horses in the U.S., there has heretofore been little information available on the structural parameters underpinning the Quarter Horse market. In this paper, we compiled a unique data set, merging together information on registrations from the American Quarter Horse Association and price data from a large regional horse auction. The data is used to estimate the supply of yearling Quarter Horses using biological production lags to identify the key structural parameters; we find an own-price elasticity of short- and long-run supply of 0.32 and 0.27. An inverse demand function is also estimated, and after accounting for endogeneity, we find a price flexibility of own-price yearling demand of -0.71. Results reveal that demand shifted inward following the horse processing ban, resulting in deadweight annual losses of over $4 million in the yearling Quarter Horse market.
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