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

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  • Steven Y. Wu

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. Copyright 2006 The Author Journal compilation 2006 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd .

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  • Steven Y. Wu, 2006. "Contract theory and agricultural policy analysis: a discussion and survey of recent developments ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(4), pages 490-509, December.
  • Handle: RePEc:bla:ajarec:v:50:y:2006:i:4:p:490-509
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    File URL: http://hdl.handle.net/10.1111/j.1467-8489.2006.00317.x
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    References listed on IDEAS

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    1. Lee, Myoungki & Wu, Steven Y., 2005. "Termination Damages and Relational Contracts," 2005 Annual meeting, July 24-27, Providence, RI 19184, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Steven Y. Wu & Brian Roe, 2007. "Contract Enforcement, Social Efficiency, and Distribution: Some Experimental Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 243-258.
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    Cited by:

    1. Ian M. Sheldon, 2021. "Reflections on a Career as an Industrial Organization and International Economist," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 468-499, June.
    2. Dell'Aquila, Crescenzo & Petriccione, Gaetana, 2012. "The EU Fruit and Vegetable Sector in the Post 2013 CAP Scenario," Politica Agricola Internazionale - International Agricultural Policy, Edizioni L'Informatore Agrario, vol. 2012(1), pages 1-16, August.
    3. Franscarelli, Angelo & Ciliberti, Stefano, 2014. "Mandatory Rules In Contracts Of Sale Of Food And Agricultural Products In Italy: An Assessment Of Article 62 Of Law 27/2012," 140th Seminar, December 13-15, 2013, Perugia, Italy 163350, European Association of Agricultural Economists.
    4. Goodrich, Brittney K. & Goodhue, Rachael E., 2020. "Are All Colonies Created Equal? The Role of Honey Bee Colony Strength in Almond Pollination Contracts," Ecological Economics, Elsevier, vol. 177(C).
    5. Annie Royer & Daniel M. Gouin, 2015. "Coordination verticale dans les secteurs québécois du porc et des légumes de transformation : statut, motivations et enjeux," CIRANO Project Reports 2015rp-03, CIRANO.
    6. Wu, Steven Y., 2013. "Adapting Contract Theory to Fit Contract Farming," 2014 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161894, Agricultural and Applied Economics Association.
    7. Cordero Salas, Paula, 2016. "Relational Contracts and Product Quality: The Effect of Bargaining Power on Efficiency and Distribution," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-19.
    8. Clerson, Frederick & Royer, Annie & Duchesne, Erick, 2016. "Des quotas aux contrats : perceptions de la filière laitière suisse et analyse contractuelle," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 356(November-).
    9. Tian Xia & John M. Crespi & Kevin C. Dhuyvetter, 2019. "Could packers manipulate spot markets by tying contracts to futures prices? And do they?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 85-102, March.
    10. Steven Y. Wu, 2014. "Adapting Contract Theory to Fit Contract Farming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1241-1256.
    11. Martino, Gaetano & Frascarelli, Angelo, 2012. "Adaptation in Food Networks: theoretical framework and empirical evidences," MPRA Paper 37600, University Library of Munich, Germany.
    12. H. Holly WANG & Jong Won PARK & Timothy BAKER, 2011. "Contracting, negotiation, and the policy change: The conflict between Korean farmers and their agricultural coo," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 57(10), pages 467-473.
    13. Stefano Ciliberti & Angelo Frascarelli, 2014. "L?obbligo dei contratti di cessione dei prodotti agricoli e alimentari: una valutazione degli effetti dell?articolo 62 della legge n. 27/2012," Economia agro-alimentare, FrancoAngeli Editore, vol. 16(1), pages 37-61.
    14. Salas, Paula Cordero, 2012. "Does Contract Enforcement Limit the Distribution of Bargaining Power? An Experimental Study," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124503, Agricultural and Applied Economics Association.
    15. 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 System Dynamics and Innovation in Food Networks.
    16. 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.
    17. Sheldon, Ian M., 2017. "The Competitiveness Of Agricultural Product And Input Markets: A Review And Synthesis Of Recent Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(1), pages 1-44, February.
    18. Malchar-Michalska, Dominika, 2014. "Koordynacja Transakcji Między Grupami Producentów Rolnych A Przemysłem Spożywczym. Studium Przypadku," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 3(164).
    19. Luca Camanzi & Giorgia Bartoli & Beatrice Biondi & Giulio Malorgio, 2018. "A Structural-Functional Theory approach to vertical coordination in agri-food supply chains: Insights from the "Gran Suino Italiano" Inter-branch Organisation," Economia agro-alimentare, FrancoAngeli Editore, vol. 20(2), pages 169-180.

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