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Interactions Between Incentive Instruments: Contracts and Quality in Processing Tomatoes

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  • Rachael E. Goodhue
  • Sandeep Mohapatra
  • Gordon C. Rausser

Abstract

Contracting and other forms of vertical coordination are important parts of the supply chains for many agricultural products. Often the buyer cares about multiple product attributes affected by a grower's actions. Using data that are insulated from common methodological problems, we test whether or not price incentives for two processing tomato quality attributes exhibit complementarity in improving delivered quality. Price incentives for the two attributes are substitutes for the provision of one and complements for the other. This finding has consequences for the profit-maximizing choice of incentive instruments for processors, and contributes to the literature regarding tests for complementarities. Copyright 2010, Oxford University Press.

Suggested Citation

  • Rachael E. Goodhue & Sandeep Mohapatra & Gordon C. Rausser, 2010. "Interactions Between Incentive Instruments: Contracts and Quality in Processing Tomatoes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1283-1293.
    • Handle: RePEc:oup:ajagec:v:92:y:2010:i:5:p:1283-1293
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    File URL: http://hdl.handle.net/10.1093/ajae/aaq061
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    Cited by:

    1. Rao, Manaswini & Shenoy, Ashish, 2023. "Got (clean) milk? Organization, incentives, and management in Indian dairy cooperatives," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 708-722.
    2. Benmehaia, Amine Mohamed & Brabez, Fatima & Benharrath, Oualid, 2017. "Production Contract Performance In Tomato Processing Industry: Analysis Of Algerian Case," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 5(2), April.
    3. An, Henry, 2012. "Complementarities in Production Technologies: An Empirical Analysis of the Dairy Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124653, Agricultural and Applied Economics Association.
    4. Zuomiao Xie & Shiqi Yuan & Jinjing Zhu & Weiming Li, 2023. "Contract farming led by a seed enterprise and incentives to produce high quality: Which contract design performs best?," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1173-1198, October.
    5. Sporleder, Thomas L. & Boland, Michael A., 2011. "Exclusivity of Agrifood Supply Chains: Seven Fundamental Economic Characteristics," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 14(5), pages 1-15, December.
    6. Travis J. Lybbert & Ashish Shenoy & Tomoé Bourdier & Caitlin Kieran, 2024. "Striving to revive pulses in India with extension, input subsidies, and output price supports†," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1167-1192, May.
    7. Mahdi, Shireen, 2012. "Quality contingent contracts : evidence from Tanzania's coffee market," Policy Research Working Paper Series 6171, The World Bank.
    8. Sporleder Thomas L. & Boland Michael A., 2013. "Seven fundamental economic characteristics exclusivity of agrifood supply chains (part 1)," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», issue 3 (35), pages 238-246.

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