| This study estimates the determinants of the exit behavior in a concentrating industry that encounters industrial restructuring. The swine industry has experienced the dramatic change in many perspectives, especially farm size and operation numbers, in the United States in past decades and the process still continues. Characterized by industrialized hog production, hog industry provides available data and a significant case study for exploring the issue related to structural change and exit behaviors. This study uses U.S. swine industry data to explore the factors that affect small producers' quitting decision. Balanced panel data for 14 major hog production states from 1988--2003 was collected. Fixed effects models and random effects model are both considered in this study. By observing the aggregate leaving pattern: exit rates, we can evaluate how exogenous shocks, macroeconomic conditions, technological improvement and scale of production, drive small-farm operators' decision-making.; The results of this study find out new large-scale entrants do not displace the incumbents. It means that the crowding-out force does not happen between large-scale producers and small-scale producers. Alternatively, we find out that the expanding larger producers' hog operation sizes pressure the small producers to leave swine industry. As for this expanding is benign or hurtful, this study does not provide the evidences to judge.; As for technology improvement, it affects the survival space for smallest hog producers. It implies that smallest category of producers have difficulty to access the improvement technology. Furthermore, technology improvement plays a buffer role for producers with scale of 100--499 head of hogs. It implies that for producers in this category need to change its efficient capacity, match the necessity of improved technology and/or raise the management skills to survive in this business.; This study also concludes that hog price is the factor to affect the incentives of raising-hogs of producers with scale of 100--499 head. In addition, this study does not observe that state-specific factors affect the exit behaviors of small producers strongly enough. It implies that state-level public programs or policies, such as environmental regulations, do not have crucial influence on small producers' exodus. |
