Effects of air pollution abatement on financial performance of Texas cotton gins

S. Fuller, M. Gillis, C. Parnell, A. Ramaiyer and R. Childers
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S. Fuller: Department of Agricultural Economics, Texas A&M University, College Station, TX 77843-2124, Postal: Department of Agricultural Economics, Texas A&M University, College Station, TX 77843-2124
M. Gillis: Department of Agricultural Economics, Texas A&M University, College Station, TX 77843-2124, Postal: Department of Agricultural Economics, Texas A&M University, College Station, TX 77843-2124
C. Parnell: Department of Agricultural Engineering, Texas A&M University, Postal: Department of Agricultural Engineering, Texas A&M University
A. Ramaiyer: Department of Agricultural Engineering, Texas A&M University, Postal: Department of Agricultural Engineering, Texas A&M University
R. Childers: Department of Agricultural Engineering, Texas A&M University, Postal: Department of Agricultural Engineering, Texas A&M University

Agribusiness, 1997, vol. 13, issue 5, 521-532

Abstract: The Federal Clean Air Act (FCAA) amendments of 1990 strengthened air pollution regulation as it affects stationary sources such as cotton gins. The primary objective of this study is to determine likely success|failure rates for Texas gin plants that would result from introducing air pollution controls. Simulation analysis is carried out with firm financial models. The analysis projects many of the small and mid-size gin plant firms that operate at relatively low volume levels to be financially unsuccessful ex ante investment in air pollution controls. As expected, the introduction of air pollution control lowers the likelihood of firm success, but, the unfavorable effect of these required investments is less pronounced among larger gin plant firms and plants that operate at high capacity levels. Results suggest the introduction of air pollution controls will accelerate the trend toward fewer and larger gin plant firms, and in order to survive, many Texas firms will find it necessary to merge|consolidate. © 1997 John Wiley & Sons, Inc.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:13:y:1997:i:5:p:521-532

DOI: 10.1002/(SICI)1520-6297(199709/10)13:5<521::AID-AGR6>3.0.CO;2-8

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