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Efficiecy Of Agrarian Organisations

Author

Listed:
  • Hrabrin Bachev

    (Institute of Agricultural Economics, Sofia, Bulgaria)

Abstract

The goal of this paper is to incorporate achievements of the New Institutional and Transaction Costs Economics to analysis of efficiency of agrarian organizations in transitional economies. That modern framework for analysis of agrarian organizations is based on their role to govern transactions between individual agents. Since governing (coordination, organization) of transactions is associated with significant costs (for finding best prices and partners, for negotiation and contracting, for monitoring and enforcement of contract terms, for adjustment and re-negotiation according to changed conditions of exchange, for dispute resolutions etc.), the economic efficiency of agrarian organizations has to assess not only their capacity to minimize the production costs, but their potential to economize transacting costs as well. Initially, main kinds of transactions of the managers of agrarian transactions (farms entrepreneurs) are clarified as land, labor, service, inputs, and finance supply; marketing; and collective actions. After that, the alternative market, non-market, and mixed modes for organization of different types of agrarian transitions are identified. Next, various types of costs associated with each form of transacting are determined. And then, the comparative efficiency of different governance structures is estimated according to (minimum) transacting costs criteria. One direction for evaluation of comparative efficiency of governing structures is based on direct assessment of items of costs for transaction in different organizations. However, that manner is often restricted since: difficulties (or impossibility) to measure absolute level of transaction costs; opposite dynamics of different items of costs in various organizations; great use of complex (and interlinked) rather than pure modes in transitional agriculture; and not existence (missing) of alternative form for organization (the base for comparison). Another direction is through comparative structural (qualitative) analysis of alternative governing forms. Firstly, critical factors of transactions in particular institutional environment are identified. These factors affect transaction costs variation, and they are associated: with behavioral characteristic of agrarian agents (bounded rationality, tendency for opportunism, building of reputation, risk aversion, level of trusts); and with economic dimensions of individual transactions (frequency, uncertainty, assets specificity and appropriability). Secondly, assessment is made on effective potential of alternative organizational modes to: minimize bounded rationality of agrarian agents and uncertainty associated with transacting; to appropriate and protect private investments from possible opportunism; to recover long-term investments for organizational development through high recurrence of transactions between same agents; to exploit economy of size and scale on specific for relationship with a particular partner capital etc. Third, principal matrix of generic organizational modes is build for effective governance of transactions with different combination of critical dimensions: free market mode if effective to carry out transactions with high appropriability and low assets specificity; the special contract form is appropriate for transactions with high frequency, and increased uncertainty and assets specificity; the internal integration can manage effectively repeated transactions with high capital dependency and big uncertainty; the hybrid and public modes are the most effective forms for occasional transactions with low appropriability and high assets specificity. Finally, effective horizontal and vertical boundaries of every specific form within each generic modes could be determined through comparison of their potential to explore economy of size (scale) on specific or (and) specialized assets, and their comparative efficiency to minimize bounded rationality and to control opportunism of counterparts.

Suggested Citation

  • Hrabrin Bachev, 2005. "Efficiecy Of Agrarian Organisations," Microeconomics 0511002, EconWPA.
  • Handle: RePEc:wpa:wuwpmi:0511002
    Note: Type of Document - pdf; pages: 15
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    File URL: http://econwpa.repec.org/eps/mic/papers/0511/0511002.pdf
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    Citations

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    Cited by:

    1. Hrabrin Bachev, 2009. "Understanding Efficiency of Agrarian Organisation," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 9(1), pages 27-42.
    2. repec:bas:econth:y:2012:i:4:p:78-104 is not listed on IDEAS
    3. Hrabrin BACHEV, 2010. "Framework For Analisis Of Agrarian Contracts," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 2(1), pages 39-66, March.
    4. Bachev, Hrabrin, 2009. "Framework for Analisis and Improvement of Agrarian Dynamics," MPRA Paper 19349, University Library of Munich, Germany.
    5. Bachev, Hrabrin, 2010. "Competitiveness of Bulgarian farms," MPRA Paper 25626, University Library of Munich, Germany.
    6. Bachev, Hrabrin, 2013. "Natural resources conservation management and strategies in agriculture," MPRA Paper 46368, University Library of Munich, Germany.
    7. Bachev, Hrabrin, 2014. "Environmental Management in Agriculture – Case of Bulgaria," MPRA Paper 59054, University Library of Munich, Germany.
    8. Bachev, Hrabrin, 2008. "Governance of Bulgarian Farming," MPRA Paper 7818, University Library of Munich, Germany.
    9. Bachev, Hrabrin, 2008. "Governing of agrarian innovations," MPRA Paper 7784, University Library of Munich, Germany.
    10. Bachev, Hrabrin, 2012. "Framework for assessing efficiency of farms and agrarian organizations," MPRA Paper 40136, University Library of Munich, Germany.
    11. Bachev, Hrabrin Ianouchev & Nanseki, T., 2008. "Risk Governance in Bulgarian Dairy Farming," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44136, European Association of Agricultural Economists.
    12. Hrabrin Bachev, 2011. "Needs, Modes and Efficiency of Economic Organizations and Public Interventions in Agriculture," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 89-103, June.
    13. Bachev, Hrabrin, 2011. "Effects of EU CAP implementation on Bulgarian farms," MPRA Paper 35510, University Library of Munich, Germany.
    14. Hrabrin Bachev, 2009. "Mechanisms Of Governance Of Sustainble Development," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(2(8)_ Sum).
    15. repec:bas:econth:y:2012:i:4:p:46-77 is not listed on IDEAS
    16. Bachev, Hrabrin, 2012. "Assessing environmental management in agriculture," MPRA Paper 35802, University Library of Munich, Germany.
    17. Bachev, Hrabrin, 2008. "Post-communist Transformation in Bulgaria – Implications for Development of Agricultural Specialization and Farming Structures," MPRA Paper 7771, University Library of Munich, Germany.
    18. Bachev, Hrabrin, 2008. "Environmental management in Bulgarian agriculture," MPRA Paper 7769, University Library of Munich, Germany.
    19. Bachev, Hrabrin, 2008. "Risk governance in agriculture," MPRA Paper 7770, University Library of Munich, Germany.
    20. Bachev, Hrabrin, 2010. "Study on Agrarian Contracts in Bulgaria," MPRA Paper 22946, University Library of Munich, Germany.
    21. Bachev, Hrabrin, 2012. "Competitiveness of Bulgarian Farms in Conditions of EU CAP Implementation," MPRA Paper 41657, University Library of Munich, Germany.
    22. Bachev, Hrabrin, 2012. "Agri-environmental Management during EU Integration of Bulgaria," MPRA Paper 42098, University Library of Munich, Germany.

    More about this item

    Keywords

    agrarian governance; efficiency of agrarian organizations; new institutional and transaction costs economics;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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