IDEAS home Printed from https://ideas.repec.org/p/ags/uwfswp/201551.html
   My bibliography  Save this paper

Quality Measurement and Contract Design: Lessons from the North American Sugarbeet Industry

Author

Listed:
  • Hueth, Brent
  • Melkonyan, Tigran

Abstract

We examine contracts used in the North American sugarbeet industry. Though quite similar in many respects, the contracts we study vary across processing firms in the set of quality measures used to condition contract payments to growers. This is somewhat surprising given the homogeneous nature of the processors’ finished product (refined sugar). It seems unlikely that processors differ significantly in how they value the various attributes of a sugarbeet, and this is perhaps the most natural reason to expect differences in the structure of quality incentives across processors. Previous attempts to explain the observed variation in sugarbeet contracts have focused on differences in organizational form across firms. In this paper, we provide an alternative explanation that relies on variation across production regions in growers’ ability to ‘control’ the relevant measures of sugarbeet quality.

Suggested Citation

  • Hueth, Brent & Melkonyan, Tigran, 2002. "Quality Measurement and Contract Design: Lessons from the North American Sugarbeet Industry," Working Papers 201551, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    • Handle: RePEc:ags:uwfswp:201551
    DOI: 10.22004/ag.econ.201551
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/201551/files/wp2002-6.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.201551?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
    2. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    3. Kim, Son Ku, 1995. "Efficiency of an Information System in an Agency Model," Econometrica, Econometric Society, vol. 63(1), pages 89-102, January.
    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. Gregory McKee & Michael Boland & Alex Offerdahl, 2009. "American Crystal Sugar Company: Making Ethanol from Sugar Beets?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(2), pages 383-392, June.
    2. Brent Hueth & Philippe Marcoul & Roger G. Ginder, 2004. "Cooperative Formation and Financial Contracting in Agricultural Markets," Center for Agricultural and Rural Development (CARD) Publications 03-wp349, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Jaenicke, Edward C. & Shields, Martin & Kelsey, Timothy W., 2007. "Food Processors' Use of Contracts to Purchase Agricultural Inputs: Evidence from a Pennsylvania Survey," Agricultural and Resource Economics Review, Cambridge University Press, vol. 36(2), pages 213-229, October.

    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. Hugo Hopenhayn & Arantxa Jarque, 2006. "Moral Hazard and Persistence," 2006 Meeting Papers 670, Society for Economic Dynamics.
    2. Nafziger, Julia, 2009. "Timing of information in agency problems with hidden actions," Journal of Mathematical Economics, Elsevier, vol. 45(11), pages 751-766, December.
    3. Lang, Matthias, 2019. "Communicating subjective evaluations," Journal of Economic Theory, Elsevier, vol. 179(C), pages 163-199.
    4. Herweg, Fabian & Müller, Daniel, 2008. "The Optimality of Simple Contracts: Moral Hazard and Loss Aversion," Bonn Econ Discussion Papers 17/2008, University of Bonn, Bonn Graduate School of Economics (BGSE).
    5. Elisa Gerten & Michael Beckmann & Elisa Gerten & Matthias Kräkel, 2022. "Information and Communication Technology, Hierarchy, and Job Design," ECONtribute Discussion Papers Series 189, University of Bonn and University of Cologne, Germany.
    6. Hugo Hopenhayn & Arantxa Jarque, 2010. "Unobservable Persistent Productivity and Long Term Contracts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(2), pages 333-349, April.
    7. Benjamin E. Hermalin & Michael L. Katz, 1994. "Corporate Diversification and Agency," Industrial Organization 9402001, University Library of Munich, Germany, revised 15 Nov 1996.
    8. Pierre Jinghong Liang, 2000. "Accounting Recognition, Moral Hazard, and Communication," Contemporary Accounting Research, John Wiley & Sons, vol. 17(3), pages 458-490, September.
    9. Fabian Herweg & Daniel Muller & Philipp Weinschenk, 2010. "Binary Payment Schemes: Moral Hazard and Loss Aversion," American Economic Review, American Economic Association, vol. 100(5), pages 2451-2477, December.
    10. Florian Hoffmann & Roman Inderst & Marcus Opp, 2021. "Only Time Will Tell: A Theory of Deferred Compensation [Motivating Innovation in Newly Public Firms]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1253-1278.
    11. Marie-Cécile Fagart & Bernard Sinclair-Desgagné, 2002. "Auditing Policies and Information Systems in Principal-agent Analysis," Cahiers de recherche 02-02, HEC Montréal, Institut d'économie appliquée.
    12. Demougin, Dominique & Fluet, Claude, 2001. "Monitoring versus incentives," European Economic Review, Elsevier, vol. 45(9), pages 1741-1764, October.
    13. Dela Cruz, Alma M., 2007. "Contractual Arrangements in Agriculture (Northern and Central Luzon Component)," Discussion Papers DP 2007-21, Philippine Institute for Development Studies.
    14. Marie‐Cécile Fagart & Claude Fluet, 2009. "Liability insurance under the negligence rule," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 486-508, September.
    15. Anqi Li & Ming Yang, 2018. "Optimal Incentive Contract with Endogenous Monitoring Technology," Papers 1810.11471, arXiv.org, revised Nov 2019.
    16. Bernard Sinclair-Desgagné & Marie-Cécile Fagart, 2004. "Auditing policies and information," Econometric Society 2004 North American Winter Meetings 86, Econometric Society.
    17. Jörg Budde & Matthias Kräkel, 2011. "Limited liability and the risk–incentive relationship," Journal of Economics, Springer, vol. 102(2), pages 97-110, March.
    18. Silvers, Randy, 2012. "The value of information in a principal–agent model with moral hazard: The ex post contracting case," Games and Economic Behavior, Elsevier, vol. 74(1), pages 352-365.
    19. Jan Starmans, 2023. "Technological Determinants of Financial Constraints," Management Science, INFORMS, vol. 69(5), pages 3003-3024, May.
    20. Eric S. Chou & Chien-Lung Chen, 2015. "Can Agents Be Better Off with Pay Caps?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(4), pages 1069-1090, October.

    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:ags:uwfswp:201551. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/dauwius.html .

    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.