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Exit from the Meatpacking Industry: A Microdata Analysis
Author(s) -
Anderson Donald W.,
Murray Brian C.,
Teague Jackqueline L.,
Lindrooth Richard C.
Publication year - 1998
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 - 10.2307/3180272
Subject(s) - microdata (statistics) , market power , market concentration , welfare , economics , consolidation (business) , scope (computer science) , market structure , market share , probit model , probit , industrial organization , economies of scale , agricultural economics , business , market economy , microeconomics , econometrics , population , demography , finance , sociology , computer science , programming language , census , monopoly , accounting
We model the determinants of plant exit from the cattle‐slaughter industry using probit to distinguish between plant‐level (e.g., age, scale, and scope) and market‐level (e.g., market share, concentration, and competitive fringe) factors. Market variables are shown to be less important determinants of exit than plant‐level factors, though a significant tendency for very small plants to exit already highly concentrated markets is apparent. Government actions to stem the industry's consolidation must consider the trade‐off between welfare gains from the reduction of market power and welfare losses from foregone technological efficiency improvements.