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Contracts and Quality in the California Winegrape Industry

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  • Rachael E. Goodhue
  • Dale M. Heien
  • Hyunok Lee
  • Daniel A. Sumner

Abstract

We analyze the relationship between product quality and contracting choices using the results of a survey of California winegrape growers. Growers who produce high-quality grapes are more likely to use formal written contracts than are growers who produce low-quality grapes. Written contracts for high-quality grapes are more likely to include provisions regarding the production process, while written contracts for low-quality grapes are more likely to include explicit financial incentives for sugar content and other product attributes.

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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 23 (2003)
Issue (Month): 3_4 (December)
Pages: 267-282

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Handle: RePEc:kap:revind:v:23:y:2003:i:3_4:p:267-282

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Web page: http://www.springerlink.com/link.asp?id=100336

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  11. Francine Lafontaine & Margaret E. Slade, 1998. "Incentive Contracting and the Franchise Decision," NBER Working Papers 6544, National Bureau of Economic Research, Inc.
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Cited by:
  1. Franken, Jason R. V. & Bacon, Kevin J., 2014. "Organizational Structure and Operation of the Illinois Wine Industry," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(1), April.
  2. Christopher M. Snyder, 2003. "Introduction to the 2003 International Industrial Organization Conference Special Issue," Review of Industrial Organization, Springer, vol. 23(3_4), pages 175-177, December.
  3. Traversac, Jean-Baptiste & Rousset, Sylvain & Perrier-Cornet, Philippe, 2011. "Farm resources, transaction costs and forward integration in agriculture: Evidence from French wine producers," Food Policy, Elsevier, vol. 36(6), pages 839-847.
  4. Anne Neumann & Christian von Hirschhausen, 2006. "Long-Term Contracts and Asset Specificity Revisited: An Empirical Analysis of Producer-Importer Relations in the Natural Gas Industry," Discussion Papers of DIW Berlin 552, DIW Berlin, German Institute for Economic Research.
  5. Anderson, Kym, 2013. "Is Georgia the next 'new' wine-exporting country?," Working Papers 162523, Robert Mondavi Institute Center for Wine Economics.
  6. Fraser, Iain, 2005. "Microeconometric analysis of wine grape supply contracts in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), March.
  7. Olmos, Marta Fernandez & Rosell-Martinez, Jorge & Espitia-Escuer, Manuel Antonio, 2008. "On the co-existence of spot and contract markets: an analysis of quality," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6082, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Fernandez-Olmos, Marta & Rosell-Martinez, Jorge & Espitia-Escuer, Manuel Antonio, 2008. "Quality and governance mode choice: a transaction cost approach to the wine industry," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44266, European Association of Agricultural Economists.
  9. Fernández Olmos, Marta, 2010. "The performance implications of "grow or buy" decisions in the wine industry," Food Policy, Elsevier, vol. 35(3), pages 256-264, June.
  10. Steiner, Bodo E., 2009. "The Extent and Nature of Contracting in the Wine Supply-Chain When Moral Hazard is Present," Staff Paper Series 154127, University of Alberta, Department of Resource Economics and Environmental Sociology.
  11. Marta Fernández-Olmos & Jorge Rosell-Mart�nez & Manuel A. Espitia-Escuer, 2009. "Vertical integration in the wine industry: a transaction costs analysis on the Rioja DOCa," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 231-250.
  12. MacDonald, James M. & Korb, Penelope J., 2011. "Agricultural Contracting Update: Contracts in 2008," Economic Information Bulletin 101279, United States Department of Agriculture, Economic Research Service.
  13. Fabrizio Cafaggi & Paola Iamiceli, 2010. "Inter-firm Networks in the European Wine Industry," EUI-LAW Working Papers 19, European University Institute (EUI), Department of Law.

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