Impacts of Change in Emission Standards on the Hog Industry

This paper develops a three-sector model to simulate the impacts of change in emission standards on the general performance of the hog industry. Total elasticities indicating how relevant economic variables respond to the new standards are calibrated. The results indicate that when the emission standard is raised, domestic hog price will rise, but other relevant variables such as domestic quantity demanded or supplied, and total quantity exported, will go in the opposite direction. The magnitude of such change, however, is in general small. Sensitivity analyses are conducted to better understand how the change in domestic and foreign demand elasticities, supply elasticities, marginal abatement cost and share of transportation will affect the industry's general performance under the new standards.