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Modeling the Effects of Restricting Packer-Owned Livestock in the U.S. Swine Industry

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  • Michael K. Wohlgenant

Abstract

An imperfectly competitive model of processor (packer) behavior is formulated to estimate welfare effects from restricting alternative marketing arrangements of livestock procured by packers. Pork was aggregated into a composite good and hog supply was partitioned into negotiated (spot), contract, and packer-owned. The model was estimated with the dynamic SUR method using weekly Mandatory Price Reporting (MPR) hog and pork data from 2001 to 2005. The model incorporates production uncertainty by modeling expected pork output as expected output in the input demand functions. The welfare effects from banning packer-owned hogs indicate that independent producers, consumers, and packers all would lose. Copyright 2010, Oxford University Press.

Suggested Citation

  • Michael K. Wohlgenant, 2010. "Modeling the Effects of Restricting Packer-Owned Livestock in the U.S. Swine Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 654-666.
  • Handle: RePEc:oup:ajagec:v:92:y:2010:i:3:p:654-666
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    File URL: http://hdl.handle.net/10.1093/ajae/aap035
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    Cited by:

    1. Adjemian, Michael & Brorsen, B. Wade & Hahn, William & Saitone, Tina L. & Sexton, Richard J., 2016. "Thinning Markets in U.S. Agriculture," Economic Information Bulletin 232928, United States Department of Agriculture, Economic Research Service.
    2. Yadavalli, Anita & Jones, Keithly, 2014. "Does media influence consumer demand? The case of lean finely textured beef in the United States," Food Policy, Elsevier, vol. 49(P1), pages 219-227.

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