We define the boundary of a livestock farm in terms of corn production as the percentage of homegrown corn in total corn required. A new theoretical model is proposed that explains how farm boundaries are shaped by the relative efficiency of two alternative transaction-facilitating mechanisms: market and hierarchy. Using tax filer data from swine farms in Ontario, this article analyzes the impact that the mechanism efficiency has on farm boundaries. To identify the potential causal effect, the USD/CAD exchange rate is used as the instrumental variable for corn price in Ontario. The findings support the theoretical model: in-house corn production expands due to not only higher price but also higher price volatility. The potential causal relationship we identified flowing from the mechanism efficiency to farm boundary may shed light on why swine and other livestock industries are shifting towards nonmarket arrangements.

中文翻译：

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养殖场饲料的制造或购买决策：来自安大略养猪场的证据

我们根据玉米产量将牲畜农场的边界定义为自产玉米占所需玉米总量的百分比。提出了一种新的理论模型，该模型解释了农场边界如何由两种替代交易促进机制的相对效率形成：市场和等级制度。本文使用安大略省养猪场的报税人数据，分析了机制效率对农场边界的影响。为了确定潜在的因果效应，美元/加元汇率被用作安大略省玉米价格的工具变量。研究结果支持理论模型：内部玉米产量不仅由于价格上涨而且价格波动性增加而扩大。