More documents from Hinrichs, Jan; Mußhoff, Oliver; Odening, Martin
More documents from Applied Economics

Export to your Reference Manger

Please Copy & Paste



Bookmark and Share

Economic Hysteresis in Hog Production

[journal article]

Hinrichs, Jan; Mußhoff, Oliver; Odening, Martin

fulltextDownloadDownload full text

(233 KByte)

Citation Suggestion

Please use the following Persistent Identifier (PID) to cite this document:

Further Details
Abstract German hog production only responds in a very limited way to price fluctuations in the pork market. The hog production concentrates on a few regions though it is not bound to special natural conditions such as soil quality. Furthermore, the volume of production does not vary over time. Relatively high market risks, sunk costs, and the flexibility of the decision maker to defer investments characterize decision problems in hog production. Thus the real option approach is chosen to explain the inertia in production capacity. By the use of panel data of specialized hog farms from the German Farm Accountancy Data Network (FADN) an empirical investment model is estimated. Formally, the model has the structure of a generalized ordered probit model. This approach allows to test for economic hysteresis in the adjustment of hog production capacity. The results confirm that uncertainty and flexibility widen the optimal range of inaction.
Document language English
Publication Year 2008
Page/Pages p. 333-340
Journal Applied Economics, 40 (2008) 3
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)