The effects of various supply and demand shifts on beef price, quantity, andindustry welfare have been widely studied under the assumption of beefquality homogeneity. In this paper, we construct a model of the beef sectorthat incorporates differences in beef quality. The model is used to analyzethe effect of supply and demand shifts on changes in prices and quantitiesof high- and low-quality beef and changes in revenue accruing to producersof high- and low-quality beef. Model results indicate that supply and demandshocks have the potential to alter the average quality of beef on the marketand the price premium charged for high-quality beef, which has importantimplications for retailers selling quality-differentiated beef and producersselling cattle on a grid.
