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Contract theory and agricultural policy analysis: a discussion and survey of recent developments

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  • Wu, Steven Y.
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    Abstract

    This paper surveys some recent developments in contract theory and illustrates how this theory might be useful for conceptualising policy issues related to vertical coordination and contracting in the agro-food industry. The article begins by surveying contract theory to identify key economic distortions that can potentially justify government involvement. Next, the general ingredients of agricultural contracts that are most likely to create inefficiencies are discussed. Finally, controversial aspects of real-world agricultural contracts are highlighted and lessons from the theory are used to determine whether government intervention is justified. Actual legislation that has been proposed in the USA is analysed where appropriate and topics that await further research are also discussed.

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    File URL: http://purl.umn.edu/116979
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    Bibliographic Info

    Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

    Volume (Year): 50 (2006)
    Issue (Month): 4 (December)
    Pages:

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    Handle: RePEc:ags:aareaj:116979

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    Related research

    Keywords: agricultural policy; industrial organisation; information; institutional economics; Agricultural and Food Policy;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Oliver Hart & John Moore, 1998. "Foundations of Incomplete Contracts," NBER Working Papers 6726, National Bureau of Economic Research, Inc.
    2. Theofanis Tsoulouhas & Tomislav Vukina, 2001. "Regulating Broiler Contracts: Tournaments Versus Fixed Performance Standards," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 1062-1073.
    3. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
    4. Georg Noldeke & Klaus M. Schmidt, 1995. "Option Contracts and Renegotiation: A Solution to the Hold-Up Problem," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 163-179, Summer.
    5. Philippe Aghion & Jean Tirole, 1994. "Formal and Real Authority in Organizations," Working papers 95-8, Massachusetts Institute of Technology (MIT), Department of Economics.
    6. Rabin, Matthew, 1997. "Psychology and Economics," Department of Economics, Working Paper Series qt8jd5z5j2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    7. Steven Wu & Brian Roe, 2006. "Tournaments, Fairness, and Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 561-573.
    8. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 917-962, August.
    9. Alan Schwartz & Robert Scott, . "Contract Theory and the Limits of Contract Law," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1011, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    10. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June.
    11. Steven Wu & Brian Roe, 2005. "Behavioral and Welfare Effects of Tournaments and Fixed Performance Contracts: Some Experimental Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 130-146.
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    Cited by:
    1. Martino, Gaetano & Frascarelli, Angelo, 2012. "Adaptation in Food Networks: theoretical framework and empirical evidences," MPRA Paper 37600, University Library of Munich, Germany.
    2. Dell'Aquila, Crescenzo & Petriccione, Gaetana, 1. "The EU Fruit and Vegetable Sector in the Post 2013 CAP Scenario," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L’Informatore Agrario, issue 1.
    3. Martino, Gaetano & Frascarelli, Angelo, 2012. "Adaptation in Food Networks: Theoretical Frame Work and Empirical Evidences," 2012 International European Forum, February 13-17, 2012, Innsbruck-Igls, Austria 144981, International European Forum on Innovation and System Dynamics in Food Networks.
    4. Escobal, Javier A. & Cavero, Denice, 2012. "Transaction Costs, Institutional Arrangements and Inequality Outcomes: Potato Marketing by Small Producers in Rural Peru," World Development, Elsevier, vol. 40(2), pages 329-341.

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