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The role of product differentiation for contract choice in the agro-food sector

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  • Jongick Jang
  • Frayne Olson

Abstract

This research examines the recent growth of contract use in the USA and European agro-food sector where asset specificity is not a dominant concern and secondary markets exist. It sheds light on the neglected capabilities of a contract to transmit buyer-specific information, obtain secondary information and price uncertain costs of buyer-specific product attributes when compared with alternative spot markets. It proposes that the value of a contract's capabilities increases with a processor's or retailer's demand for buyer-specific input attributes which require unique production practices and cannot be realised by after-harvest sorting. The implications for policy and contract design are also discussed. Oxford University Press and Foundation for the European Review of Agricultural Economics 2010; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Jongick Jang & Frayne Olson, 2010. "The role of product differentiation for contract choice in the agro-food sector," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 37(2), pages 251-273, June.
    • Handle: RePEc:oup:erevae:v:37:y:2010:i:2:p:251-273
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    File URL: http://hdl.handle.net/10.1093/erae/jbq013
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    Cited by:

    1. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(3).
    2. Reise, Christian & Liebe, Ulf & Musshoff, Oliver, 2012. "Design of substrate supply contracts for biogas plants," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124428, Australian Agricultural and Resource Economics Society.
    3. Roberts, Shane & Brooks, Kathleen & Nogueira, Lia & Walters, Cory G., 2022. "The role of quality characteristics in pricing hard red winter wheat," Food Policy, Elsevier, vol. 108(C).
    4. Alemu, Abebe Ejigu, 2016. "Determinants Of Smallholders’ Preference To Hybrids – Prospect For Upgrading To High-Value Food Chains," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 41(3).
    5. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    6. Vanessa von Schlippenbach & Isabel Teichmann, 2012. "The Strategic Use of Private Quality Standards in Food Supply Chains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1189-1201.
    7. Marianne Hubeau & Fleur Marchand & Guido Van Huylenbroeck, 2017. "Sustainability Experiments in the Agri-Food System: Uncovering the Factors of New Governance and Collaboration Success," Sustainability, MDPI, vol. 9(6), pages 1-23, June.
    8. Felicetta Carillo & Francesco Caracciolo & Luigi Cembalo, 2017. "Do durum wheat producers benefit of vertical coordination?," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-13, December.
    9. Rachael Goodhue & Leo Simon, 2016. "Agricultural contracts, adverse selection, and multiple inputs," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-33, December.
    10. Ahrendsen, Bruce L. & Bielik, Peter & Horská, Elena, 2016. "Organic Food Sourcing, Processing and Distribution: A Case of Satisfying a Growing Market," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 10(1), pages 1-6, March.
    11. Viganò, Elena & Maccaroni, Martina & Righi, Selene, 2022. "Finding the right price: supply chain contracts as a tool to guarantee sustainable economic viability of organic farms," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 25(3), January.
    12. Aubert, M. & Bouhsina, Z. & Codron, J.M. & Rousset, S., 2013. "Pesticide safety risk, food chain organization, and the adoption of sustainable farming practices. The case of Moroccan early tomatoes," Working Papers MoISA 201304, UMR MoISA : Montpellier Interdisciplinary center on Sustainable Agri-food systems (social and nutritional sciences): CIHEAM-IAMM, CIRAD, INRAE, L'Institut Agro, Montpellier SupAgro, IRD - Montpellier, France.
    13. Cholez, Celia & Magrini, Marie-Benoit & Galliano, Danielle, 2016. "Technical knowledge and production contracts between a company and its suppliers: lessons from a French case-study," 149th Seminar, October 27-28, 2016, Rennes, France 244775, European Association of Agricultural Economists.
    14. Bruno V. Miranda & Brent Ross & Jason Franken & Miguel Gómez, 2022. "Plural forms and differentiation strategies in the agri‐food sector: Evidence from the U.S. wine industry," Agribusiness, John Wiley & Sons, Ltd., vol. 38(3), pages 486-504, July.
    15. Mitchell, Tara, 2022. "Paying for Unobservable Quality: Moral Hazard and the Challenges of Maintaining Quality along the Supply Chain," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(2), May.
    16. Jebaraj Asirvatham & Sanjib Bhuyan, 2018. "Incentives and Impacts of Vertical Coordination in a Food Production-Marketing Chain: A Non-cooperative Multi-Stage, Multi-Player Analysis," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 59-95, March.
    17. Muratbek Baglan & Gershom Endelani Mwalupaso & Xue Zhou & Xianhui Geng, 2020. "Towards Cleaner Production: Certified Seed Adoption and Its Effect on Technical Efficiency," Sustainability, MDPI, vol. 12(4), pages 1-17, February.
    18. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(03), pages 1-16, August.
    19. Maria Raimondo & Francesco Caracciolo & Luigi Cembalo & Gaetano Chinnici & Biagio Pecorino & Mario D’Amico, 2018. "Making Virtue Out of Necessity: Managing the Citrus Waste Supply Chain for Bioeconomy Applications," Sustainability, MDPI, vol. 10(12), pages 1-20, December.

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