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Scale Economies and Consolidation in Hog Slaughter


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  • James M MacDonald
  • Michael E Ollinger


We use establishment based panel data to estimate a cost function which identifies the role of scale economies in hog slaughter consolidation. We find modest by extensive technological scale economies in the 1990s, and they became more important over time. But wages rose sharply with plant size through the 1970s and those wage premiums generated a pecuniary scale diseconomy that largely offset the effects of technological scale economies. The size-wage relation disappeared in the 1980; with growing technological scale economies and disappearing pecuniary diseconomies, large plants realized growing cost advantages over smaller plants, and production shifted to larger plants.

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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 00-03.

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Date of creation: Mar 2000
Date of revision:
Handle: RePEc:cen:wpaper:00-03

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;


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  1. Gallant, A. Ronald & Jorgenson, Dale W., 1979. "Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation," Journal of Econometrics, Elsevier, Elsevier, vol. 11(2-3), pages 275-302.
  2. Stevenson, Rodney, 1980. "Measuring Technological Bias," American Economic Review, American Economic Association, vol. 70(1), pages 162-73, March.
  3. Melton, Brian & Huffman, Wallace, 1995. "Beef and Pork Packing Costs and Input Demands: Effects of Unionization and Technology," Staff General Research Papers 5043, Iowa State University, Department of Economics.
  4. Allen, W Bruce & Liu, Dong, 1995. "Service Quality and Motor Carrier Costs: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 499-510, August.
  5. Hayenga, Marvin L., 1998. "Cost Structures of Pork Slaughter and Processing Firms: Behavioral and Performance Implications," Staff General Research Papers 1254, Iowa State University, Department of Economics.
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Cited by:
  1. Jean-Philippe Gervais, 2011. "Disentangling nonlinearities in the long- and short-run price relationships: an application to the US hog/pork supply chain," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 43(12), pages 1497-1510.
  2. Christian Genthon, 2007. "Can we measure Microsoft's market power ?," Post-Print halshs-00153837, HAL.
  3. Ollinger, Michael, 2009. "The Cost of Food Safety Technologies in the Meat and Poultry Industries," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin, Agricultural and Applied Economics Association 48783, Agricultural and Applied Economics Association.
  4. Ward, Clement E., 2002. "A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, Canadian Agricultural Economics Society, issue 03.
  5. Gervais, J.P. & Bonroy, O. & Couture, S., 2007. "A province-level analysis of economies of scale in Canadian food processing," Working Papers, Grenoble Applied Economics Laboratory (GAEL) 200710, Grenoble Applied Economics Laboratory (GAEL).
  6. Kim, C.S. & McElroy, Robert G. & Mishra, Ashok K. & Hallahan, Charles B., 2002. "Biased Biased Technological Progress In The U.S. Farm Sector: A Structural Perspective," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California, Western Agricultural Economics Association 36526, Western Agricultural Economics Association.
  7. Philip L. Paarlberg & Mildred M. Haley, 2001. "Market concentration and vertical coordination in the pork industry: Implications for public policy analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 17(2), pages 197-212.
  8. MacDonald, James M., 2002. "Agribusiness Concentration, Competition And Nafta," Structural Change as a Source of Trade Disputes Under NAFTA; Proceedings of the 7th Agricultural and Food Policy Systems Information Workshop - 2001, Farm Foundation, Agricultural and Food Policy Syst 16883, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
  9. Ollinger, Michael & Ralston, Katherine L. & Guthrie, Joanne F., 2012. "Location, School Characteristics, and the Cost of School Meals," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 37(3), December.
  10. Gervais, Jean-Phillipe & Schroeder, Ted, 2005. "Structural Implications of Persistent Disharmony in North American Beef and Pork Industries," 2005 NAAMIC Workshop II: Agrifood Regulatory and Policy Integration under Stress, North American Agrifood Market Integration Consortium (NAAMIC) 163861, North American Agrifood Market Integration Consortium (NAAMIC).
  11. Michael G. Hogberg & Kellie Curry Raper & James F. Oehmke, 2009. "Banning subtherapeutic antibiotics in U.S. swine production: a simulation of impacts on industry structure," Agribusiness, John Wiley & Sons, Ltd., vol. 25(3), pages 314-330.
  12. Lee, Chinkook & Schluter, Gerald E., 2001. "Consolidation, Economies Of Scale, And The Heckshcer-Ohlin Theory Of Trade - An Empirical Analysis Of Us Meat Processing Industry," International Trade in Livestock Products Symposium, January 18-19, 2001, Auckland, New Zealand, International Agricultural Trade Research Consortium 14559, International Agricultural Trade Research Consortium.
  13. B. Brorsen & Taeyoon Kim, 2013. "Data aggregation in stochastic frontier models: the closed skew normal distribution," Journal of Productivity Analysis, Springer, Springer, vol. 39(1), pages 27-34, February.
  14. Gervais, Jean-Philippe & Bonroy, Olivier & Couture, Steve, 2006. "Economies of Scale in the Canadian Food Processing Industry," MPRA Paper 64, University Library of Munich, Germany.
  15. Aguero, Jorge M. & Gould, Brian W., 2004. "Structural Change In U.S. Cheese Manufacturing: A Translog Cost Analysis Of A Panel Of Cheese Plants," 2004 Annual meeting, August 1-4, Denver, CO, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20274, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).


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