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Deriving Feeder Cattle Pricing Contracts From Fed Cattle Price Grids: Simulation Results Of Risk-Sharing Contracts

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  • Wang, Chia-Hsing
  • Roe, Brian E.

Abstract

Post-slaughter quality-based pricing of cattle is increasingly common. This quality, however, is dependent upon unobservable quality characteristics of the feeder cattle used as inputs. Through stochastic simulation we construct incentive compatible quality risk-sharing contracts based upon final grid-quality schedules that facilitate input quality sorting in the feeder cattle market.

Suggested Citation

  • Wang, Chia-Hsing & Roe, Brian E., 2002. "Deriving Feeder Cattle Pricing Contracts From Fed Cattle Price Grids: Simulation Results Of Risk-Sharing Contracts," 2002 Annual meeting, July 28-31, Long Beach, CA 19755, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19755
    DOI: 10.22004/ag.econ.19755
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    References listed on IDEAS

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    1. Douglas W. Allen & Dean Lueck, 1993. "Transaction Costs and the Design of Cropshare Contracts," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 78-100, Spring.
    2. Sugato Bhattacharyya & Francine Lafontaine, 1995. "Double-Sided Moral Hazard and the Nature of Share Contracts," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 761-781, Winter.
    3. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
    4. Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer.
    5. Reid, Joseph D, Jr, 1977. "The Theory of Share Tenancy Revisited-Again," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 403-407, April.
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