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Abstract
In Denmark, the concentration of pig
production is highest in the western part of the
country. However, there may be even larger local
differences in the number of pigs produced. In this
study we analyze the determinants of the location of
pig production in Denmark with particular focus on
spatial externalities and the interaction between the
location of pig production and upstream sector and
slaughterhouses. It is the assumption that the location
of slaughterhouses is influenced by the location of the
primary producers, implying that this variable is
endogenous, whereas the location of primary
producers is independent of the location of
slaughterhouses. This is due to the fact that
transportation costs of pigs are paid by the
cooperatives owning the slaughterhouses. This
assumption is tested applying a spatial econometric
model. The model is estimated for 1999 and 2004.
Furthermore, the impact of negative environmental
externalities of pig production on location is analyzed.
The results show that spatial externalities have a
positive effect on the location of pig production
whereas environmental regulation has a negative
effect on location.