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| Olmos, Marta Fernandez; Rosell-Martinez, Jorge; Espitia-Escuer, Manuel Antonio. |
| The possible co-existence of spot and contract market that can emerge in the presence of quality issues with a number of growers and processors in each stage is something that has largely remained an open question in the literature. This paper is an attempt to fill this void. We use a straightforward two-stage Cournot oligopoly model with specific demand and cost functions. In the first stage, processors decide simultaneously whether or not to set an incentive contract. The second stage is the stage in which growers choose their levels of quantity and quality based on the industry structure developed in the first stage. With the help of numerical simulations we conducted the study of the equilibrium structures. Our results suggest that for a wide range of... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Marketing. |
| Ano: 2008 |
URL: http://purl.umn.edu/6082 |
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| 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. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Crop Production/Industries. |
| Ano: 2008 |
URL: http://purl.umn.edu/6065 |
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| Fernandez-Olmos, Marta; Rosell-Martinez, Jorge; Espitia-Escuer, Manuel Antonio. |
| This paper develops a double-sided moral hazard model of share contract in agriculture, with imperfect quality measurement by the agent and the principal, who contribute to the final good quality in terms of production effort and marketing effort respectively. Using this model, we analyse the implications of the share contract for quantity and quality, often ignored in previous analysis. With the help of a simulation exercise, we prove that the outcome-conditioned share generally weakens the agent´s incentive to make effort in quality input. This finding could explain the contractual evidence in some differentiated markets such as the wine market, where bottle-price conditioned contracts are rarely used. |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Share-contract; Double moral-hazard; Quality; Farm Management. |
| Ano: 2008 |
URL: http://purl.umn.edu/43863 |
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