Exit from the meatpacking industry: A microdata analysis

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.

Duke Scholars

Author Brian Murray Environmental Sciences and Policy