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Potential collusion and trust: Evidence from a field experiment in Vietnam

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  • Torero, Maximo
  • Viceisza, Angelino C.G.

Abstract

In a typical contract farming arrangement, a firm contracts a farmer to deliver a certain quantityquality combination of a product at a certain point in time for payment at a specified price based on quality attributes. These arrangements tend to be subject to lack of ‘trust’ on both sides, since they typically are subject to asymmetric information because quality attributes are unobservable and costly to assess. We conducted variants of framed trust games using contract dairy farmers in Vietnam as first movers to assess (1) baseline trust between these farmers and the firm that contracts them and (2) the impact of potential collusion between the firm and a third party on trust. While farmers are more likely to trust in the presence of the third party, potential collusion does not significantly reduce their propensity to trust. We discuss the external validity of our findings and some implications for policy.

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  • Torero, Maximo & Viceisza, Angelino C.G., 2016. "Potential collusion and trust: Evidence from a field experiment in Vietnam," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(1), pages 1-11.
    • Handle: RePEc:ags:afjare:233846
    DOI: 10.22004/ag.econ.233846
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    3. Adu-Gyamfi Poku & Regina Birner & Saurabh Gupta, 2018. "Making Contract Farming Arrangements Work in Africa’s Bioeconomy: Evidence from Cassava Outgrower Schemes in Ghana," Sustainability, MDPI, vol. 10(5), pages 1-21, May.
    4. Sebastian Kunte & Meike Wollni & Claudia Keser, 2017. "Making it personal: breach and private ordering in a contract farming experiment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(1), pages 121-148.
    5. Nicholas Minot & Loraine Ronchi, 2014. "Contract Farming," World Bank Publications - Reports 24249, The World Bank Group.
    6. David Laborde & Will Martin & Dominique van der Mensbrugghe, 2017. "Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 403-425, May.
    7. Mailu, Stephen & Will, Margret & Mwanza, Rosemary & Nkanata, Kinyua & Mbugua, David, 2014. "Milk supply contracts and default incidence in Kenya," MPRA Paper 57381, University Library of Munich, Germany, revised 10 Apr 2014.
    8. Cai, Ximing & Yang, Yi-Chen E. & Zhao, Jianshi & Ringler, Claudia, 2011. "Can water allocation in the Yellow River basin be improved?: Insights from a multi-agent system model," IFPRI discussion papers 1117, International Food Policy Research Institute (IFPRI).
    9. Voors, Maarten & Demont, Matty & Bulte, Erwin, 2016. "New Experiments in Agriculture," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(1), pages 1-7, March.
    10. de Brauw, Alan & Gilligan, Daniel, 2011. "Using the regression discontinuity design with implicit partitions: The impacts of comunidades solidarias rurales on schooling in El Salvador," IFPRI discussion papers 1116, International Food Policy Research Institute (IFPRI).
    11. Zambrano, Patricia & Maldonado, Jorge H. & Mendoza, Sandra L. & Ruiz, Lorena & Fonseca, Luz Amparo & Cardona, Iván, 2011. "Women cotton farmers: Their perceptions and experiences with transgenic varieties: A case study for Colombia," IFPRI discussion papers 1118, International Food Policy Research Institute (IFPRI).
    12. Poku, A.-G. & Birner, R. & Gupta, S., 2018. "How To Make Contract Farming Arrangements Work: Evidence From A Public And A Private Cassava Outgrower Scheme In Ghana," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277471, International Association of Agricultural Economists.
    13. Romero, Christina & Wollni, Meike, 2015. "The effect of opportunistic behavior on trust: An experimental approach," GlobalFood Discussion Papers 206382, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    14. Prasad, Sanjay K. & Pullabhotla, Hemant & Ganesh-Kumar, A., 2011. "Supply and demand for cereals in Nepal, 2010–2030:," IFPRI discussion papers 1120, International Food Policy Research Institute (IFPRI).

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