Persistence of firm-level profitability in the European dairy processing industry

Stefan Hirsch and Monika Hartmann

Agricultural Economics, 2014, vol. 45, issue S1, 53-63

Abstract: Based on autoregressive (AR) models and Arellano-Bond dynamic panel estimation, this article analyses profit persistence in the European dairy processing industry. The sample comprises 590 dairy processors from the following five countries: Belgium, France, Italy, Spain, and the United Kingdom. The AR models indicate that cooperatives which account for around 20% of all firms in the dairy processing sector are not primarily profit oriented. In addition, the results point toward a high level of competition as profit persistence is rather low even if cooperatives are excluded. The panel model reveals that short- as well as long-run profit persistence is influenced by firm and industry characteristics.

Date: 2014
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