Vertically Aligned Vs. Open Market Coordination: Dominance Or Co-Existence?
Will a more tightly aligned system become the exclusive coordination or governance system in the pork industry? The analysis shows that the packer prefers to source hogs from both an aligned market and an independent market. This result is because the packer, facing variability in the demand for premium pork, must balance the cost of higher quality aligned hogs and independent hogs against the states of nature for demand for the premium product.
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