Firm-household interrelationships on Dutch dairy farms

In this article an agricultural household model is developed in which production and consumption decisions are non-separable. On the basis of this model the importance of coupling production and consumption decisions is investigated for the Dutch dairy sector both before and after the introduction of a milk quota. Its importance is determined by comparing farm-profit elasticities that are based on both types of decisions with those that are based on production decisions only. It turns out that the differences between these elasticities are quite small