Scale Economies and Consolidation in Hog Slaughter

13 Pages Posted: 24 Mar 2020

See all articles by James M. MacDonald

James M. MacDonald

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Michael Ollinger

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: May 2000

Abstract

We use establishment based panel data to estimate a cost function which identifies the role of scale economies in hog slaughter consolidation. We find modest but extensive technological scale economies in the 1990s, and they became more important over time. But wages rose sharply with plant size through the 1970s, and those wage premiums generated a pecuniary scale diseconomy that largely offset the effects of technological scale economies. The size‐wage relation disappeared in the 1980s; with growing technological scale economies and disappearing pecuniary diseconomies, large plants realized growing cost advantages over smaller plants, and production shifted to larger plants.

Keywords: competition, hog slaughter, meatpacking, scale economies, structural change, D240, Q110

Suggested Citation

MacDonald, James M. and Ollinger, Michael, Scale Economies and Consolidation in Hog Slaughter (May 2000). American Journal of Agricultural Economics, Vol. 82, Issue 2, pp. 334-346, 2000, Available at SSRN: https://ssrn.com/abstract=3557448 or http://dx.doi.org/10.1111/0002-9092.00029

James M. MacDonald (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5610 (Phone)

Michael Ollinger

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

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