Foie gras is the product made from the force feeding of duck or geese. France produces 75% of the world´s production of foie gras, and southwestern France produces about 70% of that total (The Guardian, 2016). In May 2016 French authorities outlawed the production of this luxury good due to the H5N1 virus detected in a chicken farm in the Dorgdone.
It could be assumed that the foie gras market is a perfectly competitive one (Figure 1). This is because there are many buyers and sellers, there are few barriers to entry and firms are price takers, their demand curve is perfectly elastic.
Moreover, as foie gras has few substitutes it´s Price Elasticity of Demand (PED) is inelastic. Similarly, in the short run, it´s Price Elasticity of Supply …show more content…
However, this ban is only temporary meaning that it´s only a short term effect. Also, higher prices mean demand for foie gras might fall. In evaluation, foie gras is a luxury good, it´s consumption at any given price rises more than in proportion to an increase in income (John Black, 2010, p.273), so it has a high Income Elasticity of Demand. In particular, foie gras is a Veblen good, so as prices increase so does demand (Economics Help). Which further highlights the fact that producers may face higher incomes in the short …show more content…
This will especially affect consumers as foie gras is highly consumed during Christmas, meaning that many families may not be able to afford it for this year as prices will be very high.
Moreover, the ban in the production of foie gras is going to have positive externalities as it may help reduce health problems. Foie gras, if consumed regularly, may cause obesity and even heart attack and so if it´s production is prohibited society will not suffer from this. However, foie gras is a minor cause of these health problems, meaning that the ban is not going to have a big impact on society.
Further on, there is already a vanguard of consumers who object to the farming methods behind foie gras, such as the force feeding of the animals, and so this ban will re inforce people who defend animal rights and could make their campaigns even stronger. This could possibly lead to the collapse of the industry especially if the number of people who are against the production of this good increases.
Finally, Figure 4 shows consumer surplus. As prices increase from Pe to P2, consumer surplus decreases from PeAP to
It could be assumed that the foie gras market is a perfectly competitive one (Figure 1). This is because there are many buyers and sellers, there are few barriers to entry and firms are price takers, their demand curve is perfectly elastic.
Moreover, as foie gras has few substitutes it´s Price Elasticity of Demand (PED) is inelastic. Similarly, in the short run, it´s Price Elasticity of Supply …show more content…
However, this ban is only temporary meaning that it´s only a short term effect. Also, higher prices mean demand for foie gras might fall. In evaluation, foie gras is a luxury good, it´s consumption at any given price rises more than in proportion to an increase in income (John Black, 2010, p.273), so it has a high Income Elasticity of Demand. In particular, foie gras is a Veblen good, so as prices increase so does demand (Economics Help). Which further highlights the fact that producers may face higher incomes in the short …show more content…
This will especially affect consumers as foie gras is highly consumed during Christmas, meaning that many families may not be able to afford it for this year as prices will be very high.
Moreover, the ban in the production of foie gras is going to have positive externalities as it may help reduce health problems. Foie gras, if consumed regularly, may cause obesity and even heart attack and so if it´s production is prohibited society will not suffer from this. However, foie gras is a minor cause of these health problems, meaning that the ban is not going to have a big impact on society.
Further on, there is already a vanguard of consumers who object to the farming methods behind foie gras, such as the force feeding of the animals, and so this ban will re inforce people who defend animal rights and could make their campaigns even stronger. This could possibly lead to the collapse of the industry especially if the number of people who are against the production of this good increases.
Finally, Figure 4 shows consumer surplus. As prices increase from Pe to P2, consumer surplus decreases from PeAP to