Productivity or Demand: Determinants of Plant Survival and Ownership Change in the U.S. Poultry Industry

Tengying Weng, Tomislav Vukina and Xiaoyong Zheng ()

Applied Economic Perspectives and Policy, 2015, vol. 37, issue 1, 151-175

Abstract: We study the productivity-survival link in the U.S. poultry processing industry using longitudinal data constructed from 5 censuses of manufactures between 1987 and 2007. First, we study the effects of physical productivity and demand-specific factors on plant survival and ownership change. Second, we analyze the determinants of the firm-level expansion. The results show that higher demand-specific factors decrease the probability of exit and increase the probability of ownership change. The effect of physical productivity on the probability of exit or ownership change is generally insignificant. Also, firms with higher demand-specific factors have higher probability to expand, whereas average firm-level physical productivity turns out to be an insignificant determinant of firm expansion. Since demand specific factors all favor large companies, this could expedite industry concentration process already well under way and could raise new concerns over contract growers' income and consumers' welfare.

Date: 2015
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