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Does the regulation of manure land application work against agglomeration economies? Theory and evidence from the French hog sector

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Author Info

  • Carl Gaigné
  • Julie Le Gallo
  • Solène Larue
  • Bertrand Schmitt

Abstract

The well-known increase in the geographical concentration of hog production suggests the presence of agglomeration economies related to spatial spillovers and inter-dependencies among industries. In this paper, we examine whether the restrictions on land application of manure may weaken productivity gains arising from the agglomeration process. We develop a model of production showing the ambiguous spatial effect of land availability and the restriction on the manure application rate. Indeed, while the regulation of manure application triggers dispersion when manure is applied to land as a crop nutrient, it also prompts farmer to adopt manure treatment that favors agglomeration of hog production. Estimations of a reduced form of the spatial model with a spatial HAC procedure applied to data for French hog production for 1988 and 2000 confirm the ambiguous effect of land limitations induced by the restrictions on manure application. It does not prevent spatial concentration of hog production, and even boosts the role played by spatial spillovers in the agglomeration process.

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Bibliographic Info

Paper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 11-02.

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Length: 33 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:rae:wpaper:201102

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Related research

Keywords: hog production; land availability; manure application regulation; agglomeration economies; spatial econometrics;

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  1. 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.
  2. Robert Innes, 2000. "The Economics of Livestock Waste and Its Regulation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 97-117.
  3. Kelejian, Harry H. & Prucha, Ingmar R., 2007. "HAC estimation in a spatial framework," Journal of Econometrics, Elsevier, vol. 140(1), pages 131-154, September.
  4. Duranton, Gilles & Puga, Diego, 2003. "Microfoundations of Urban Agglomeration Economies," CEPR Discussion Papers 4062, C.E.P.R. Discussion Papers.
  5. Keplinger, Keith O. & Hauck, Larry M., 2006. "The Economics of Manure Utilization: Model and Application," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(02), August.
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  7. Eli Feinerman & Marinus Komen, 2005. "The Use of Organic vs. Chemical Fertilizer with a Mineral Losses Tax: The Case of Dutch Arable Farmers," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(3), pages 367-388, November.
  8. Jonathan D. Kaplan & Robert C. Johansson & Mark Peters, 2004. "The Manure Hits the Land: Economic and Environmental Implications When Land Application of Nutrients Is Constrained," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 688-700.
  9. Key, Nigel D. & McBride, William D., 2007. "The Changing Economics of U.S. Hog Production," Economic Research Report 6389, United States Department of Agriculture, Economic Research Service.
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  11. Bernard Fingleton & Julie Le Gallo, 2008. "Estimating spatial models with endogenous variables, a spatial lag and spatially dependent disturbances: Finite sample properties," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 319-339, 08.
  12. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
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  14. Sol�ne Larue & Jens Abildtrup & Bertrand Schmitt, 2011. "Positive and Negative Agglomeration Externalities: Arbitration in the Pig Sector," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 167-183.
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Cited by:
  1. Abay Mulatu & Ada Wossink, 2012. "Environmental regulation and location of industrialised agricultural production in Europe," The School of Economics Discussion Paper Series 1215, Economics, The University of Manchester.

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