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The role of product differentiation for contract choice in the agro-food sector

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  • Jongick Jang
  • Frayne Olson

Abstract

This research examines the recent growth of contract use in the USA and European agro-food sector where asset specificity is not a dominant concern and secondary markets exist. It sheds light on the neglected capabilities of a contract to transmit buyer-specific information, obtain secondary information and price uncertain costs of buyer-specific product attributes when compared with alternative spot markets. It proposes that the value of a contract's capabilities increases with a processor's or retailer's demand for buyer-specific input attributes which require unique production practices and cannot be realised by after-harvest sorting. The implications for policy and contract design are also discussed. Oxford University Press and Foundation for the European Review of Agricultural Economics 2010; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Jongick Jang & Frayne Olson, 2010. "The role of product differentiation for contract choice in the agro-food sector," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 37(2), pages 251-273, June.
    • Handle: RePEc:oup:erevae:v:37:y:2010:i:2:p:251-273
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    File URL: http://hdl.handle.net/10.1093/erae/jbq013
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    Cited by:

    1. Felicetta Carillo & Francesco Caracciolo & Luigi Cembalo, 2017. "Do durum wheat producers benefit of vertical coordination?," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-13, December.
    2. Rachael Goodhue & Leo Simon, 2016. "Agricultural contracts, adverse selection, and multiple inputs," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-33, December.
    3. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(3).
    4. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    5. Reise, Christian & Liebe, Ulf & Musshoff, Oliver, 2012. "Design of substrate supply contracts for biogas plants," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124428, Australian Agricultural and Resource Economics Society.
    6. Ahrendsen, Bruce L. & Bielik, Peter & Horská, Elena, 2016. "Organic Food Sourcing, Processing and Distribution: A Case of Satisfying a Growing Market," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 10(1), pages 1-6, March.
    7. Vanessa von Schlippenbach & Isabel Teichmann, 2012. "The Strategic Use of Private Quality Standards in Food Supply Chains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1189-1201.
    8. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(03), pages 1-16, August.
    9. Maria Raimondo & Francesco Caracciolo & Luigi Cembalo & Gaetano Chinnici & Biagio Pecorino & Mario D’Amico, 2018. "Making Virtue Out of Necessity: Managing the Citrus Waste Supply Chain for Bioeconomy Applications," Sustainability, MDPI, vol. 10(12), pages 1-20, December.
    10. Magali Aubert & Zouhair Bouhsina & Jean Marie Codron & Sylvain Rousset, 2013. "Pesticide safety risk, food chain organization, and the adoption of sustainable farming practices. The case of Moroccan early tomatoes," Post-Print hal-02806083, HAL.
    11. Viganò, Elena & Maccaroni, Martina & Righi, Selene, 2022. "Finding the right price: supply chain contracts as a tool to guarantee sustainable economic viability of organic farms," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 25(3), January.
    12. Roberts, Shane & Brooks, Kathleen & Nogueira, Lia & Walters, Cory G., 2022. "The role of quality characteristics in pricing hard red winter wheat," Food Policy, Elsevier, vol. 108(C).
    13. Mitchell, Tara, 2022. "Paying for Unobservable Quality: Moral Hazard and the Challenges of Maintaining Quality along the Supply Chain," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(2), May.
    14. Alemu, Abebe Ejigu, 2016. "Determinants Of Smallholders’ Preference To Hybrids – Prospect For Upgrading To High-Value Food Chains," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 41(3).
    15. Cholez, Celia & Magrini, Marie-Benoit & Galliano, Danielle, 2016. "Technical knowledge and production contracts between a company and its suppliers: lessons from a French case-study," 149th Seminar, October 27-28, 2016, Rennes, France 244775, European Association of Agricultural Economists.
    16. Bruno V. Miranda & Brent Ross & Jason Franken & Miguel Gómez, 2022. "Plural forms and differentiation strategies in the agri‐food sector: Evidence from the U.S. wine industry," Agribusiness, John Wiley & Sons, Ltd., vol. 38(3), pages 486-504, July.
    17. Jebaraj Asirvatham & Sanjib Bhuyan, 2018. "Incentives and Impacts of Vertical Coordination in a Food Production-Marketing Chain: A Non-cooperative Multi-Stage, Multi-Player Analysis," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 59-95, March.
    18. Marianne Hubeau & Fleur Marchand & Guido Van Huylenbroeck, 2017. "Sustainability Experiments in the Agri-Food System: Uncovering the Factors of New Governance and Collaboration Success," Sustainability, MDPI, vol. 9(6), pages 1-23, June.
    19. Muratbek Baglan & Gershom Endelani Mwalupaso & Xue Zhou & Xianhui Geng, 2020. "Towards Cleaner Production: Certified Seed Adoption and Its Effect on Technical Efficiency," Sustainability, MDPI, vol. 12(4), pages 1-17, February.

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