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The yield/quality trade-off and contractual choice

Listed author(s):
  • Olmos, Marta Fernandez
  • Rosell-Martinez, Jorge
  • Espitia-Escuer, Manuel Antonio

This paper provides an analysis of the choice of governance mechanism in agriculture using an integrated perspective based on agency theory. The main ways of organizing agriculture are compared: spot market and incentive contract. With the analytical development of both models, it is explored that the choice of the optimal mechanism depends on initial conditions such as uncertainty, the risk aversion of the agents or the number of competitors. Moreover, according to the predictions made by the economic literature on agrarian organization, the results support the coexistence of both governance alternatives.

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File URL: http://purl.umn.edu/6065
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida with number 6065.

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Date of creation: 2008
Handle: RePEc:ags:aaea08:6065
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  10. Giraud-Heraud, Eric & Soler, Louis-Georges & Tanguy, Herve, 1999. "Avoiding Double Marginalisation in Agro-Food Chains," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 179-198, June.
  11. Alexander, Corinne E. & Goodhue, Rachael E. & Rausser, Gordon C., 2007. "Do Incentives For Quality Matter?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(01), April.
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  14. Andersson, Hans, 1995. "Primary and Secondary Producers: Economic Implications of Contracts in the Food Marketing Chain," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 22(3), pages 310-320.
  15. Brent Hueth & Ethan Ligon, 1999. "Agricultural Supply Response Under Contract," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 610-615.
  16. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
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  19. Brent Hueth & Ethan Ligon, 2002. "Estimation of an efficient tomato contract," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(2), pages 237-253, June.
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