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Agglomeration Externalities and Technical Efficiency in Pig Production

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  • Larue, S.
  • Latruffe, Laure

Abstract

The objective of the paper is to assess the effects of agglomeration on technical efficiency of French pig farms. We use a two-stage method to evaluate the effects of agglomeration on technical efficiency. The first stage consists in calculating pig activity’s efficiency scores with the non-parametric method Data Envelopment Analysis (DEA). The second stage is a truncated regression of these scores on agglomeration variables. Data are for 899 French pig producers in 2004. Results suggest that these farms were as much affected by positive agglomeration externalities (that are knowledge spillovers due to farms’ density, and also arise from farms’ closeness to downstream market) as any other businesses. There was however no evidence of negative externalities in the form of constraints in farmers’ land demand due to legal disposition relating to manure spreading.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44272.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:44272

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Keywords: Agglomeration; Externalities; Data Envelopment Analysis; Industrial Organization; Livestock Production/Industries;

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  1. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
  2. Brian Roe & Elena G. Irwin & Jeff S. Sharp, 2002. "Pigs in Space: Modeling the Spatial Structure of Hog Production in Traditional and Nontraditional Production Regions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 259-278.
  3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  4. J.V. Henderson, 1972. "The Sizes and Types of Cities," Working Papers 75, Queen's University, Department of Economics.
  5. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  6. Isabelle Piot-Lepetit & Monique Moing, 2007. "Productivity and environmental regulation: the effect of the nitrates directive in the French pig sector," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 38(4), pages 433-446, December.
  7. Philippe Le Goffe & Julien Salanié, 2005. "Le droit d’épandage a-t-il un prix ? Mesure sur le marché foncier," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 77, pages 36-64.
  8. Ragnar Tveteras & George E. Battese, 2006. "Agglomeration Externalities, Productivity, And Technical Inefficiency," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 605-625.
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