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Oligopsony Power, Asset Specificity, and Hold-Up: Evidence from the Broiler Industry

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  • Tomislav Vukina
  • Porametr Leegomonchai

Abstract

In this article we look for empirical evidence of hold-up in broiler industry production contracts by using the cross-sectional national survey of broiler growers. First, we focus on the problem of under-investment and hypothesize that the degree of agent's (grower's) under-investment systematically depends on the principal's (integrator's) market power and the level of asset specificity. Second, we provide an indirect test of hold-up by looking at the grower contract payoffs as a function of the frequency of the housing facilities upgrade requests and the principal's market power. The results show moderate empirical support for the presence of hold-up. Copyright 2006, Oxford University Press.

Suggested Citation

  • Tomislav Vukina & Porametr Leegomonchai, 2006. "Oligopsony Power, Asset Specificity, and Hold-Up: Evidence from the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 589-605.
    • Handle: RePEc:oup:ajagec:v:88:y:2006:i:3:p:589-605
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00881.x
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