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Agglomeration externalities and technical efficiency in pig production

Author

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  • Solene Larue

    (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement)

  • Laure Latruffe

    () (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

Abstract

The objective of the paper is to assess the effects of agglomeration on technical efficiency of French pig farms. The increasing concentration of pig production in western France is a typical example of how agglomeration externalities may have positive effects on farm performance in particular. However, negative externalities implied by concentration have lately appeared. They are due to increasing competition for land following the introduction of a law governing polluting activities according to which pig producers need to have a minimum area available where their manure can be spread. We use a two-stage method, where the first stage consists in calculating pig activity's efficiency scores with the non-parametric method Data Envelopment Analysis (DEA), and the second stage is a truncated regression of these scores on agglomeration variables. Data are for one thousand French pig producers in 2004, provided by the French Institute of the Pig Sector (IFIP). Results suggest that French pig producers were affected by both positive and negative agglomeration externalities at this period. Positive externalities are in the form of knowledge spillovers facilitated by the proximity of farms, and in the form of closeness to downstream market. Negative externalities suggest that agglomeration constrains farmers in their land demand due to legal disposition relating to manure spreading.

Suggested Citation

  • Solene Larue & Laure Latruffe, 2007. "Agglomeration externalities and technical efficiency in pig production," Post-Print hal-02416809, HAL.
  • Handle: RePEc:hal:journl:hal-02416809
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02416809
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    References listed on IDEAS

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    1. Larue, Solene & Abildtrup, Jens & Schmitt, Bertrand, 2008. "Modelling the Spatial Structure of Pig Production in Denmark," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44281, European Association of Agricultural Economists.
    2. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-656, September.
    3. 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.
    4. Laure Latruffe & Kelvin Balcombe & Sophia Davidova & Katarzyna Zawalinska, 2005. "Technical and scale efficiency of crop and livestock farms in Poland : does specialization matte r?," Post-Print hal-02392195, HAL.
    5. Ragnar Tveteras & George E. Battese, 2006. "Agglomeration Externalities, Productivity, And Technical Inefficiency," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 605-625, October.
    6. 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.
    7. 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.
    8. 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.
    9. Isabelle Piot-Lepetit & Monique Moing, 2007. "Productivity and environmental regulation: the effect of the nitrates directive in the French pig sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 433-446, December.
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    Cited by:

    1. Kenichi Kashiwagi & Erina Iwasaki, 2020. "Effect of agglomeration on technical efficiency of small and medium‐sized garment firms in Egypt," African Development Review, African Development Bank, vol. 32(1), pages 14-26, March.

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