| Three hundred small tomato growers located in Brazilian northeast states, supplied a processing industry. In view of the large number of contract hazards and weak enforcement of clauses, managers have decided to move to the Midwest, where a reduced number of larger farmers have been contracted. The industry blamed high transaction costs due to the weak mechanism of public enforcement of property rights. The industry blamed some farmers of selling the product at the market for fresh consumption. Also, farmers blamed the industry for taking advantage of asymmetric information related to quality. This study presents an analysis of contract architecture and an evaluation of effects of transaction costs related variables on the likelihood of contract breaches.... |
