| Hardcopy Reference: |
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| Title: |
A Markov Chain Analysis of the Size of Hog Production Firms in the United States |
| Author(s): |
Jeffrey M. Gillespie, Joan R. Fulton |
| Publication Year: |
2001 |
| Reference: |
Agribusiness, Vol. 17 (4) 557–570 (2001) |
| Country: |
USA |
| Summary: |
The objective of this article is to estimate, using Markov chain analysis, the relative
importance of input and output prices and other factors in the determination of the size
distribution of hog operations in the United States in recent years. It was found that the hog–corn price ratio was not significant for the medium and large producers, although it was significant for smaller producers. Other significant factors influencing entry and exit include the interest rate. Unexpectedly, corporate farming laws did not appear to have a significant influence on hog production. Overall, the lack of significance of variables in the medium and large entry-exit equations leads to the conclusion that there are important factors that are not included in our model. Therefore, it appears that a traditional neoclassical view of the world does not fully capture the
dynamics of what is driving change in the industry, and thus leads to important avenues of further research. |
| Abstract: |
The U.S. hog industry expanded rapidly during the 1980s and 1990s. Along with this expansion,
hog farms have become larger, partly due to economies of size and new business arrangements.
Using markov chain analysis, this study analyzes the movement of hog farms among three different
size categories. Results indicate that the hog–corn price ratio has continued to affect the entry and
exit of small hog farms, and has influenced the movement of hog farms among size categories.
Interest rates, processing capacity, and agglomeration economies have impacted new entry of hog
farms in the Unites States |
| Database: |
Economics |
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