Journal of Agricultural and Resource Economics
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North Carolina imposed a moratorium on the construction and expansion of swine farms in 1997. Existing facilities were granted production permits tied to specific properties, but the quota contributed to the consolidation of pork processors and stifled competition in the market for live hogs. Theory predicts that production permits should be a source of quasi rents to farmers but that the market power of processors would reduce their value. Using a hedonic model of farm sales from 1994 to 2010 we find that the value of production permits dropped from 55% of the average farm price to 49%, costing farmers on average $68 thousand.
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