IDEAS home Printed from https://ideas.repec.org/a/oup/erevae/v33y2006i1p73-92.html
   My bibliography  Save this article

Self-enforcing contracts in agriculture

Author

Listed:
  • Ola Kvaløy

Abstract

This article examines a self-enforcing contract between a risk-neutral principal and a risk-averse agent who is able to hold up values ex post. It shows that risk aversion and variance can only partly explain the contract's incentive intensity. Ex post bargaining power and outside options will also determine contract choice. If the agent's ex post bargaining position is weak, the principal cannot commit to high-powered incentives, whereas if the agent's ex post bargaining position is good, the agent cannot commit to low-powered incentives. The model may thus explain some puzzles in agricultural contracts, in particular why risk-averse agents sometimes accept to be governed by high-powered incentive contracts that are quite similar to fixed rental contracts, and why risk-neutral agents are sometimes offered share contracts with lower-powered incentives. Copyright 2006, Oxford University Press.

Suggested Citation

  • Ola Kvaløy, 2006. "Self-enforcing contracts in agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(1), pages 73-92, March.
    • Handle: RePEc:oup:erevae:v:33:y:2006:i:1:p:73-92
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mkhabela, Thulasizwe, 2018. "Dual Moral Hazard and Adverse Selection in South African Agribusiness: It Takes Two to Tango," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(3), February.
    2. Tang, Christopher S. & Sodhi, ManMohan S. & Formentini, Marco, 2016. "An analysis of partially-guaranteed-price contracts between farmers and agri-food companies," European Journal of Operational Research, Elsevier, vol. 254(3), pages 1063-1073.
    3. Jano, Pilar & Hueth, Brent, 2013. "Quality Incentives in Informal Markets: The Case of Ecuadorian Cocoa," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150378, Agricultural and Applied Economics Association.
    4. repec:ags:aaea13:150001 is not listed on IDEAS
    5. Skidmore, Marin & Baylis, Kathy & Arends-Kuenning, Mary P. & Michelson, Hope C., 2017. "The Effect of Intermediary Market Power on Grain Quality in India," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259174, Agricultural and Applied Economics Association.

    More about this item

    Statistics

    Access and download statistics

    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:oup:erevae:v:33:y:2006:i:1:p:73-92. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.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.