Abstract
AbstractWe define the boundary of a livestock farm in terms of corn production as the percentage of homegrown corn in total corn required. A new theoretical model is proposed that explains how farm boundaries are shaped by the relative efficiency of two alternative transaction‐facilitating mechanisms: market and hierarchy. Using tax filer data from swine farms in Ontario, this article analyzes the impact that the mechanism efficiency has on farm boundaries. To identify the potential causal effect, the USD/CAD exchange rate is used as the instrumental variable for corn price in Ontario. The findings support the theoretical model: in‐house corn production expands due to not only higher price but also higher price volatility. The potential causal relationship we identified flowing from the mechanism efficiency to farm boundary may shed light on why swine and other livestock industries are shifting towards nonmarket arrangements.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
