The pricing accuracy of dairy bull semen available for artificial insemination is investigated using a price model cast in terms of a two-tier efficiency model, which allows estimating an overprice and underprice given the net return the bull’s daughter is expected to contribute to the farm based upon the transmittable trait characteristics of a bull. The estimation produces statistically significant coefficients, including the coefficients for the overpricing and underpricing of the semen. The average estimate of overpricing is around 25%, and the average estimate of underpricing is around 33%. As expected, low semen prices tend to be underpriced and high semen prices tend to be overpriced.
Tauer, Loren W.
"Determining the Accuracy of Holstein Bull Semen Prices with a Two-Tier Efficiency Model,"
Journal of Applied Farm Economics: Vol. 4
Available at: https://docs.lib.purdue.edu/jafe/vol4/iss1/5