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Does Environmental Regulation Work Against Agglomeration Economies? Evidence From French Hog Production

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  • Carl Gaigne
  • Julie LeGallo
  • Bertrand Schmitt

    ()

Abstract

The well-known rise 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 manure management regulation restricting manure application per acre may weaken productivity gains arising from the agglomeration process. We develop a spatial model of production showing that, on the one hand, dispersion is favored when manure is applied to land as a crop nutrient and, on the other hand, agglomeration is strengthened when farmers adopt manure treatment. Estimations of a reduced form of the spatial model with a SHAC procedure applied on 1988 and 2000 French hog production data confirm the role played by the spatial spillovers and the backward and forwards relationships. Results also suggest that manure management regulation does not work against the spatial concentration of hog production, but boosts the role played by spatial spillovers in agglomeration process

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p1326.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa10p1326

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  1. Fujita,Masahisa & Thisse,Jacques-Francois, 2002. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9780521805247, December.
  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. 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.
  4. Edward E. Leamer & Michael Storper, 2001. "The Economic Geography of the Internet Age," NBER Working Papers 8450, National Bureau of Economic Research, Inc.
  5. 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.
  6. Kelejian, Harry H. & Prucha, Ingmar R., 2007. "HAC estimation in a spatial framework," Journal of Econometrics, Elsevier, vol. 140(1), pages 131-154, September.
  7. Murat Isik, 2004. "Environmental Regulation and the Spatial Structure of the U.S. Dairy Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 949-962.
  8. 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.
  9. 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.
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