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Careers in arm’s-length contracting: evidence from the Chilean wine-grape market

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  • Pilar Jano
  • Brent Hueth

Abstract

This paper investigates the presence of career and promotion-based incentives in the context of arm’s-length contracting between wineries and independent wine-grape farmers. We hypothesise that long-term contracts represent a stage in a farmer’s career after a series of short-term contracts. We develop a conceptual framework to frame the interaction between explicit performance incentives and implicit career incentives arising from the possibility of promotion to a long-term contract, conditional on wineries learning a farmer’s potential for superior-quality production. Based on data from Chilean wine-grape farmers, we find evidence suggesting that implicit market-based incentives, usually studied in the context of employment contracts, are also important in arm’s-length contracts used in procurement of farm output.

Suggested Citation

  • Pilar Jano & Brent Hueth, 2023. "Careers in arm’s-length contracting: evidence from the Chilean wine-grape market," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(1), pages 173-198.
    • Handle: RePEc:oup:erevae:v:50:y:2023:i:1:p:173-198.
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    File URL: http://hdl.handle.net/10.1093/erae/jbac007
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