IDEAS home Printed from https://ideas.repec.org/p/ags/aaea01/20534.html
   My bibliography  Save this paper

Retail Contracting And Grower Prices

Author

Listed:
  • Patterson, Paul M.
  • Richards, Timothy J.

Abstract

Contracting directly between produce shippers and retailers is growing in importance. Retailers seek to obtain reliable supplies, while reducing their reliance on recurring market transactions. Producers seek stable prices and market access. These private transactions diminish spot market liquidity and enhance noncompetitive buying opportunities, raising concerns over the resulting impact on grower prices, whether under contract or not, and the future produce market structure. Primary data are used to test hypotheses on contract participation. Simulations on grower prices reveal that contract prices are generally lower, but less variable, than market prices, suggesting a form of risk sharing.

Suggested Citation

  • Patterson, Paul M. & Richards, Timothy J., 2001. "Retail Contracting And Grower Prices," 2001 Annual meeting, August 5-8, Chicago, IL 20534, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20534
    DOI: 10.22004/ag.econ.20534
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/20534/files/sp01pa05.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.20534?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nicholas J. Powers, 1995. "Sticky short-run prices and vertical pricing: Evidence from the market for iceberg lettuce," Agribusiness, John Wiley & Sons, Ltd., vol. 11(1), pages 57-75.
    2. Bruce L. Gardner, 1975. "The Farm-Retail Price Spread in a Competitive Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 399-409.
    3. David A. Hennessy, 1996. "Information Asymmetry as a Reason for Food Industry Vertical Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 1034-1043.
    4. Goodhue, Rachael E. & Rausser, Gordon C. & Simon, Leo K., 1998. "Understanding Production Contracts: Testing An Agency Theory Model," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20946, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer.
    6. Rachael E. Goodhue, 2000. "Broiler Production Contracts as a Multi-Agent Problem: Common Risk, Incentives and Heterogeneity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 606-622.
    7. Jewitt, Ian, 1988. "Justifying the First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 56(5), pages 1177-1190, September.
    8. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Vertical Integration," Staff General Research Papers Archive 10422, Iowa State University, Department of Economics.
    9. Brent Hueth & Ethan Ligon, 1999. "Producer Price Risk and Quality Measurement," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 512-524.
    10. Richards, Timothy J. & Patterson, Paul M., 2000. "New Varieties And The Returns To Commodity Promotion: The Case Of Fuji Apples," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), pages 1-14, April.
    11. Erin Anderson & David C. Schmittlein, 1984. "Integration of the Sales Force: An Empirical Examination," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 385-395, Autumn.
    12. Erin Anderson, 1985. "The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis," Marketing Science, INFORMS, vol. 4(3), pages 234-254.
    13. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    14. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-991, September.
    15. Martin, Laura L., 1997. "Production Contracts, Risk Shifting, and Relative Performance Payments in the Pork Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 267-278, December.
    16. Charles R. Knoeber & Walter N. Thurman, 1995. ""Don't Count Your Chickens...": Risk and Risk Shifting in the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 486-496.
    17. Minkler, Alanson P., 1990. "An empirical analysis of a firm's decision to franchise," Economics Letters, Elsevier, vol. 34(1), pages 77-82, September.
    18. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
    19. Lafontaine, Francine & Slade, Margaret E., 1996. "Retail contracting and costly monitoring: Theory and evidence," European Economic Review, Elsevier, vol. 40(3-5), pages 923-932, April.
    20. McLaughlin, Edward W. & Park, Kristen & Perosio, Debra J., 1997. "Fresh Track 1997: Marketing and Performance Benchmarks for the Fresh Produce Industry," Research Bulletins 122811, Cornell University, Department of Applied Economics and Management.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francine Lafontaine & Margaret E. Slade, 1998. "Incentive Contracting and the Franchise Decision," NBER Working Papers 6544, National Bureau of Economic Research, Inc.
    2. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    3. Lafontaine, Francine & Slade, Margaret E., 1996. "Retail contracting and costly monitoring: Theory and evidence," European Economic Review, Elsevier, vol. 40(3-5), pages 923-932, April.
    4. repec:oup:apecpp:v:40:y:2018:i:3:p:379-401. is not listed on IDEAS
    5. Sonia Di Giannatale & Itza T. Q. Curiel-Cabral & Jacqueline Chacón, 2021. "Monitoring decisions in vertical integration," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(3), pages 441-462, September.
    6. Canice Prendergast, 2000. "The Tenuous Tradeoff Between Risk and Incentives," NBER Working Papers 7815, National Bureau of Economic Research, Inc.
    7. Michael Waldman, 2012. "Theory and Evidence in Internal LaborMarkets [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    8. Affuso, L., 2000. "Intra-Firm Retail Contracting: Survey Evidence from the UK'," Cambridge Working Papers in Economics 0022, Faculty of Economics, University of Cambridge.
    9. Timothy Bresnahan & Jonathan Levin, 2012. "Vertical Integration and Market Structure [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    10. Victor Aguirregabiria & Margaret Slade, 2017. "Empirical models of firms and industries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1445-1488, December.
    11. Key, Nigel D. & McBride, William D., 2008. "Do Production Contracts Raise Farm Productivity? An Instrumental Variables Approach," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), pages 1-12.
    12. Hu, Y. & Hendrikse, G.W.J., 2007. "Allocation of Decision Rights in Fruit and Vegetable Contracts in China," ERIM Report Series Research in Management ERS-2007-077-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    13. Andersson, Fredrik, 2004. "A Trickle-Down Theory of Incentives with Applications to Privatization and Outsourcing," Working Papers 2004:13, Lund University, Department of Economics.
    14. Martinez, Stephen W., 2002. "Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries," Agricultural Economic Reports 34051, United States Department of Agriculture, Economic Research Service.
    15. Resende Filho, Moises de Andrade, 2007. "A Principal-Agent Model for Investigating Traceability Systems Incentives on Food Safety," 105th Seminar, March 8-10, 2007, Bologna, Italy 7897, European Association of Agricultural Economists.
    16. Fraser, Iain, 2005. "Microeconometric analysis of wine grape supply contracts in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 1-24.
    17. 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.
    18. 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.
    19. Gonzalez-Diaz, Manuel & Arrunada, Benito & Fernandez, Alberto, 2000. "Causes of subcontracting: evidence from panel data on construction firms," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 167-187, June.
    20. Manuel González & Benito Arruñada & Alberto Fernández, 1997. "La decisión de subcontratar: el caso de las empresas constructoras," Investigaciones Economicas, Fundación SEPI, vol. 21(3), pages 501-521, September.
    21. Thomsen, Michael R. & Goodwin, Harold L., Jr. & Rodriquez, Angela, 2004. "The Sky Is Falling: An Examination Of Broiler Contract Design And Grower Revenues," 2004 Annual meeting, August 1-4, Denver, CO 20418, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Keywords

    Marketing;

    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:ags:aaea01:20534. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.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.