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Modeling the Effects of Restricting Packer‐Owned Livestock in the U.S. Swine Industry
Author(s) -
Wohlgenant Michael K.
Publication year - 2010
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aap035
Subject(s) - welfare , livestock , production (economics) , animal welfare , business , economics , agricultural economics , microeconomics , market economy , biology , ecology
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.