Advanced Search
MyIDEAS: Login

Quality Incentives in Informal Markets: The Case of Ecuadorian Cocoa

Contents:

Author Info

  • Jano, Pilar
  • Hueth, Brent
Registered author(s):

    Abstract

    We investigate the economic importance of implicit quality incentives in an agricultural market that lacks the institutional capacity for measuring quality verifiably. We measure the magnitude of implicit price premiums for quality, and we distinguish empirically between hedonic-pricing and implicit-contracting motivations for observed incentives. We find price premiums comparable in magnitude to premiums observed in other agricultural markets where quality is measured verifiably. Premiums are highest for relatively low-value but highly-informative quality characteristics, and buyers who are informationally close to farmers implicitly reward actions that affect unobservable quality characteristics. We conclude that implicit contracting is used to provide quality incentives comparable in magnitude to what is provided through more explicit means in formally organized markets.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://purl.umn.edu/150378
    Download Restriction: no

    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 150378.

    as in new window
    Length:
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:ags:aaea13:150378

    Contact details of provider:
    Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
    Phone: (414) 918-3190
    Fax: (414) 276-3349
    Email:
    Web page: http://www.aaea.org
    More information through EDIRC

    Related research

    Keywords: quality; incentives; implicit contracts; cocoa; Crop Production/Industries; Demand and Price Analysis; International Relations/Trade;

    References

    References listed on IDEAS
    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.:
    as in new window
    1. McDonald, R. Allen & Schroeder, Ted C., 2000. "Determinants Of Profit Variability In Fed Cattle Grid Pricing," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36514, Western Agricultural Economics Association.
    2. Makoto Ohta & Zvi Griliches, 1976. "Automobile Prices Revisited: Extensions of the Hedonic Hypothesis," NBER Chapters, in: Household Production and Consumption, pages 325-398 National Bureau of Economic Research, Inc.
    3. Marcel Fafchamps & Ruth Hill & Bart Minten, 2006. "Quality Control in Non-Staple Food Markets: Evidence from India," Economics Series Working Papers GPRG-WPS-057, University of Oxford, Department of Economics.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Ola Kvaløy, 2006. "Self-enforcing contracts in agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(1), pages 73-92, March.
    6. Espinosa, Juan Andres & Goodwin, Barry K., 1991. "Hedonic Price Estimation For Kansas Wheat Characteristics," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(01), July.
    7. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
    8. François Bourguignon & Martin Fournier & Marc Gurgand, 2004. "Selection Bias Corrections Based on the Multinomial Logit Model: Monte-Carlo Comparisons," DELTA Working Papers 2004-20, DELTA (Ecole normale supérieure).
    9. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
    10. Ligon, Ethan, 2002. "Estimation of an Efficient Tomato Contract," Staff General Research Papers 10235, Iowa State University, Department of Economics.
    11. Bentley MacLeod, 2001. "Optimal Contracting with Subjective Evaluation," Theory workshop papers 357966000000000036, UCLA Department of Economics.
    12. Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
    13. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:150378. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.