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Exit from the meatpacking industry: a microdata analysis
- Anderson, D.W., Murray, B.C., Teague, J.L., Lindrooth, R.C.
- American journal of agricultural economics 1998 v.80 no.1 pp. 96-106
- packaging, beef, slaughterhouses, decision making, probit analysis, data analysis, profitability, equations, livestock and meat industry
- 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.