IDEAS home Printed from https://ideas.repec.org/p/ags/aaea01/20723.html
   My bibliography  Save this paper

Cash Market Or Contract? How Technology And Consumer Demand Influence The Decision

Author

Listed:
  • Dimitri, Carolyn
  • Jaenicke, Edward C.

Abstract

The use of contracts for producing and marketing agricultural commodities has become nearly universal in some sectors. Two factors are most frequently cited as being responsible for the use of agricultural contracts. The first, a demand-side factor, is the development of strong consumer preferences for specific qualities. The second, a supply-side factor, is technological change. In this paper, we use a principal agent framework to model how consumer demand and technology enter into a firm's decision to use contracts or the cash market.

Suggested Citation

  • Dimitri, Carolyn & Jaenicke, Edward C., 2001. "Cash Market Or Contract? How Technology And Consumer Demand Influence The Decision," 2001 Annual meeting, August 5-8, Chicago, IL 20723, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20723
    DOI: 10.22004/ag.econ.20723
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/20723/files/sp01di01.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.20723?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. 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.
    2. Ewell P. Roy, 1958. "Alternative way of Coordinating Production and Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 40(5), pages 1790-1797.
    3. Azzam, Azzeddine M. & Schroeter, John R., 1997. "Concentration in Beef Packing: Do Gains Outweigh Losses?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 12(1), pages 1-3.
    4. V. James Rhodes, 1995. "The Industrialization of Hog Production," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 17(2), pages 107-118.
    5. Timothy J. Richards & Paul M. Patterson & Ram N. Acharya, 2001. "Price Behavior in a Dynamic Oligopsony: Washington Processing Potatoes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 259-271.
    6. Martinez, Stephen W., 1999. "Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products," Agricultural Economic Reports 34031, United States Department of Agriculture, Economic Research Service.
    7. Perry, Janet E. & Banker, David E. & Green, Robert C., 1999. "Broiler Farms' Organization, Management, and Performance," Agricultural Information Bulletins 33739, United States Department of Agriculture, Economic Research Service.
    8. Knoeber, Charles R, 1989. "A Real Game of Chicken: Contracts, Tournaments, and the Production of Broilers," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(2), pages 271-292, Fall.
    9. David A. Hennessy & John D. Lawrence, 1999. "Contractual Relations, Control, and Quality in the Hog Sector," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(1), pages 52-67.
    10. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 155-179, April.
    11. Allen M. Featherstone & Bruce J. Sherrick, 1992. "Financing Vertically Coordinated Agricultural Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(5), pages 1232-1237.
    12. Peleg, Bezalel, 1975. "Efficient random variables," Journal of Mathematical Economics, Elsevier, vol. 2(2), pages 243-252.
    13. Peleg, Bezalel & Yaari, M E, 1975. "A Price Characterization of Efficient Random Variables," Econometrica, Econometric Society, vol. 43(2), pages 283-292, March.
    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. Hueth, Brent & Ligon, Ethan & Dimitri, Carolyn, 2007. "AJAE Appendix: Agricultural Contracts: Data and Research Needs," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(5), pages 1-7, December.
    2. Charles R. Knoeber, 2000. "Les contrats de production dans l'agriculture américaine. Une caractérisation de la recherche empirique actuelle," Économie rurale, Programme National Persée, vol. 259(1), pages 3-15.
    3. Wang, Yanguo & Jaenicke, Edward C., 2004. "Static And Dynamic Efficiency Of Pooled Broiler Contracts: Relative-Performance Contracts Vs. Fixed-Performance Contracts," 2004 Annual meeting, August 1-4, Denver, CO 20406, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Young, Linda M. & Hobbs, Jill E., 2000. "Public Policy Responses To Increased Vertical Linkages In Agri-Food Supply Chains," Research Discussion Papers 29237, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.
    5. Poray, Michael C. & Gray, Allan W. & Boehlje, Michael, 2002. "Evaluation of Alternative Coordination Systems Between Producers and Packers in the Pork Value Chain," Staff Papers 200386, Purdue University, Department of Agricultural Economics.
    6. Preckel, Paul V. & Boehlje, Michael & Gray, Allan W. & Kim, Sounghun, 2004. "Vertically Aligned Vs. Open Market Coordination: Dominance Or Co-Existence?," 2004 Annual meeting, August 1-4, Denver, CO 20099, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Ahearn, Mary Clare & Korb, Penelope J. & Banker, David E., 2005. "Industrialization and Contracting in U.S. Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(2), pages 1-18, August.
    8. McBride, William D. & Key, Nigel D., 2003. "Economic And Structural Relationships In U.S. Hog Production," Agricultural Economic Reports 33971, United States Department of Agriculture, Economic Research Service.
    9. Goodhue, Rachael E. & Rausser, Gordon C. & Simon, Leo K., 2000. "Processor placements and producer incentives: analyzing broiler chicken production contracts," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2tc2g983, Department of Agricultural & Resource Economics, UC Berkeley.
    10. Wei Shi & Brian L. Connelly & Wm. Gerard Sanders, 2016. "Buying bad behavior: Tournament incentives and securities class action lawsuits," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1354-1378, July.
    11. Yu, Xiaohua & Abler, David G. & Peng, Chao, 2008. "Dancing with the Dragon Heads: Enforcement, Innovations and Efficiency of Contracts between Agricultural Processors and Farmers in China," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6144, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Zhen Wang & Tomislav Vukina, 2017. "Welfare effects of payment truncation in piece rate tournaments," Journal of Economics, Springer, vol. 120(3), pages 219-249, April.
    13. Roman M. Sheremeta, 2016. "The pros and cons of workplace tournaments," IZA World of Labor, Institute of Labor Economics (IZA), pages 302-302, October.
    14. Chambers, Robert G. & Quiggin, John, 1992. "On Separation Results in Forward and Futures Markets," Working Papers 197790, University of Maryland, Department of Agricultural and Resource Economics.
    15. John Bovay, 2025. "Shaming, stringency, and shirking: Evidence from food‐safety inspections," American Journal of Agricultural Economics, John Wiley & Sons, vol. 107(1), pages 152-180, January.
    16. Chin, Ming-Chin & Weaver, Robert D., 2002. "Contracting, Captive Supplies, And Price Behavior," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19052, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    17. 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(01), pages 1-24.
    18. Elanor Starmer & Aimee Witteman & Timothy A. Wise, "undated". "Feeding the Factory Farm: Implicit Subsidies to the Broiler Chicken Industry," GDAE Working Papers 06-03, GDAE, Tufts University.
    19. Kimbrough, Erik O. & Laughren, Kevin & Sheremeta, Roman, 2020. "War and conflict in economics: Theories, applications, and recent trends," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 998-1013.
    20. Araujo, Aloisio & Chateauneuf, Alain & Faro, José Heleno, 2018. "Financial market structures revealed by pricing rules: Efficient complete markets are prevalent," Journal of Economic Theory, Elsevier, vol. 173(C), pages 257-288.

    More about this item

    Keywords

    Demand and Price Analysis; 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:aaea01:20723. 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.