IDEAS home Printed from https://ideas.repec.org/a/bpj/bjafio/v5y2007i1n10.html
   My bibliography  Save this article

Scale and Transaction Costs in the U.S. Biopower Industry

Author

Listed:
  • Altman Ira J

    (Southern Illinois University — Carbondale)

  • Klein Peter G.

    (University of Missouri — Columbia)

  • Johnson Thomas G.

    (University of Missouri — Columbia)

Abstract

With increasing interest in renewable energy from agriculture, including biopower and cellulose ethanol, there is a need for better understanding of the economic organization of this emerging industry. Study of the organization of the biopower industry represents an under-researched area and a new application of transaction cost theory to an emerging industry.Refinement of the theory can also result from challenging applications. This article provides an application of transaction cost economics to the existing United States biopower industry while challenging the empirical convention of excluding production cost variables from transaction cost analysis. Utilizing survey data from 53 biopower generators we study the relationship between physical asset specificity, site specificity, and scale in explaining firms' decisions to procure inputs internally, externally, or to use both methods. Consistent with transaction cost theory, both site specificity and scale are good predictors of organizational form. Given this evidence, this article reconsiders the impact of scale and transaction costs on the choice of organizational from.

Suggested Citation

  • Altman Ira J & Klein Peter G. & Johnson Thomas G., 2007. "Scale and Transaction Costs in the U.S. Biopower Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-19, December.
    • Handle: RePEc:bpj:bjafio:v:5:y:2007:i:1:n:10
    DOI: 10.2202/1542-0485.1170
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1542-0485.1170
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1542-0485.1170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Peter G. Klein, 2005. "The Make-or-Buy Decision: Lessons from Empirical Studies," Springer Books, in: Claude Menard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 17, pages 435-464, Springer.
    2. Joskow, Paul L, 1985. "Vertical Integration and Long-term Contracts: The Case of Coal-burning Electric Generating Plants," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 1(1), pages 33-80, Spring.
    3. Richard N. Langlois & Nicolai J. Foss, 1999. "Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization," Kyklos, Wiley Blackwell, vol. 52(2), pages 201-218, May.
    4. Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-185, March.
    5. Sykuta, Michael E. & Klein, Peter G. & James, Harvey S., Jr., 2005. "Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form," 2005 Annual meeting, July 24-27, Providence, RI 19390, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Paul L. Joskow, 1990. "The Performance of Long-Term Contracts: Further Evidence from Coal Markets," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 251-274, Summer.
    7. Masten, Scott E & Crocker, Keith J, 1985. "Efficient Adaptation in Long-term Contracts: Take-or-Pay Provisions for Natural Gas," American Economic Review, American Economic Association, vol. 75(5), pages 1083-1093, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Altman, Ira & Bergtold, Jason & Sanders, Dwight & Johnson, Tom, 2015. "Willingness to supply biomass for bioenergy production: A random parameter truncated analysis," Energy Economics, Elsevier, vol. 47(C), pages 1-10.
    2. Doris Morales & Ahmad H. Juma´h & Antonio Llorens-Rivera & Félix Cue & Ángel Ruiz, 2012. "Tendencias del traslado de actividades en las manufactureras en Puerto Rico y el título de propiedad sobre la planta física, 2005-2011," Economic Analysis Working Papers (2002-2010). Atlantic Review of Economics (2011-2016), Colexio de Economistas de A Coruña, Spain and Fundación Una Galicia Moderna, vol. 2, pages 1-1, December.
    3. Altman, Ira J. & Johnson, Thomas G. & Moon, Wanki, 2010. "Organizational Preferences and Producer Characteristics in Biomass Supply Chains," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 28(2), pages 1-12.
    4. Hobbs, Jill E. & Weseen, Simon & Kerr, William A., 2012. "Transaction Costs, Hold-Ups and Governance in Ethanol Supply Chains," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125158, International Association of Agricultural Economists.
    5. Brodrechtova, Yvonne, 2015. "Economic valuation of long-term timber contracts: Empirical evidence from Germany," Forest Policy and Economics, Elsevier, vol. 55(C), pages 1-9.
    6. Weseen, Simon & Hobbs, Jill & Kerr, William A., 2014. "Reducing Hold-up Risks in Ethanol Supply Chains: A Transaction Cost Perspective," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(2), pages 1-24, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Altman, Ira J. & Klein, Peter G. & Johnson, Thomas G., 2006. "Scale as a Transaction Cost Variable in the U.S. Biopower Industry," 2006 Annual meeting, July 23-26, Long Beach, CA 21141, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Kyle J. Mayer & Nicholas S. Argyres, 2004. "Learning to Contract: Evidence from the Personal Computer Industry," Organization Science, INFORMS, vol. 15(4), pages 394-410, August.
    3. Robert Gibbons, 2010. "Transaction‐Cost Economics: Past, Present, and Future?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 263-288, June.
    4. Raji Srinivasan & Thomas H. Brush, 2006. "Supplier Performance in Vertical Alliances: The Effects of Self-Enforcing Agreements and Enforceable Contracts," Organization Science, INFORMS, vol. 17(4), pages 436-452, August.
    5. Altman, Ira J. & Johnson, Thomas G., 2004. "A Transaction Cost Econoimcs View Of Agriculture Exchanges For Biopower: Theoretical And Methodological Concerns," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34686, Southern Agricultural Economics Association.
    6. López-Bayón, Susana & González-Díaz, Manuel, 2010. "Indefinite contract duration: Evidence from electronics subcontracting," International Review of Law and Economics, Elsevier, vol. 30(2), pages 145-159, June.
    7. Gibbons, Robert, 2005. "Four forma(lizable) theories of the firm?," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 200-245, October.
    8. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    9. Thomas N. Hubbard, 1999. "How Wide is the Scope of Hold-Up-Based Theories? Contractual Form and Market Thickness in Trucking," NBER Working Papers 7347, National Bureau of Economic Research, Inc.
    10. Tang, Shufen & Zheng, Yuqing & Li, Taiping & Zhou, Li, 2021. "The Hold-up Problem in China’s Broiler Industry: Empirical Evidence from Jiangsu Province," 2021 ASAE 10th International Conference (Virtual), January 11-13, Beijing, China 329410, Asian Society of Agricultural Economists (ASAE).
    11. Chalkley, Martin & McVicar, Duncan, 2008. "Choice of contracts in the British National Health Service: An empirical study," Journal of Health Economics, Elsevier, vol. 27(5), pages 1155-1167, September.
    12. Pierre-André Chiappori & Bernard Salanié, 2002. "Testing Contract Theory : A Survey of Some Recent Work," Working Papers 2002-11, Center for Research in Economics and Statistics.
    13. Hauteclocque, Adrien de & Glachant, Jean-Michel, 2009. "Long-term energy supply contracts in European competition policy: Fuzzy not crazy," Energy Policy, Elsevier, vol. 37(12), pages 5399-5407, December.
    14. Marian Moszoro & Pablo T. Spiller & Sebastian Stolorz, 2016. "Rigidity of Public Contracts," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(3), pages 396-427, September.
    15. Shufen Tang & Yuqing Zheng & Taiping Li & Li Zhou, 2021. "The hold‐up problem in China's broiler industry: Empirical evidence from Jiangsu Province," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(4), pages 539-554, December.
    16. Di Maria, Corrado & Lange, Ian & van der Werf, Edwin, 2014. "Should we be worried about the green paradox? Announcement effects of the Acid Rain Program," European Economic Review, Elsevier, vol. 69(C), pages 143-162.
    17. Matthew J. Bidwell, 2012. "Politics and Firm Boundaries: How Organizational Structure, Group Interests, and Resources Affect Outsourcing," Organization Science, INFORMS, vol. 23(6), pages 1622-1642, December.
    18. Stéphane Saussier, 1998. "La durée des contrats interentreprises : une analyse empirique," Économie et Prévision, Programme National Persée, vol. 135(4), pages 137-146.
    19. Nicholas S. Argyres & Janet Bercovitz & Kyle J. Mayer, 2007. "Complementarity and Evolution of Contractual Provisions: An Empirical Study of IT Services Contracts," Organization Science, INFORMS, vol. 18(1), pages 3-19, February.
    20. Jérôme Barthélemy & Bertrand Quélin, 2002. "Competence, Specificity and Outsourcing : Impact on the complexity of the contract," Working Papers hal-00593655, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bjafio:v:5:y:2007:i:1:n:10. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.