IDEAS home Printed from https://ideas.repec.org/p/ags/aaea10/61362.html
   My bibliography  Save this paper

Governance Issues in the Principal-Agent Framework: Producing Cellulosic Ethanol in Michigan

Author

Listed:
  • Pandey, Vivek
  • Shanoyan, Aleksan
  • Ross, Brent

Abstract

This article analyzes the incentives and compensation problems faced by cellulosic ethanol producer and logging firms and the consequent impact on the organization of the wood based cellulosic ethanol industry in the US. The success of this relationship is central to setting up the biofuel industry in Michigan and in the US at large. The theoretical results indicate that specification contract under the principal-agent framework is of limited utility due to’ metering’ problem when the principal contracts with multiple agents for the supply of feedstock.. Alternative arrangements including JVs have the potential to provide close to first best solutions.

Suggested Citation

  • Pandey, Vivek & Shanoyan, Aleksan & Ross, Brent, 2010. "Governance Issues in the Principal-Agent Framework: Producing Cellulosic Ethanol in Michigan," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61362, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61362
    DOI: 10.22004/ag.econ.61362
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/61362/files/AAEA%20Pandey%20paper-2.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.61362?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. Oliver E. Williamson, 1991. "Strategizing, economizing, and economic organization," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 75-94, December.
    2. Macho-Stadler, Ines & Perez-Castrillo, J. David, 2001. "An Introduction to the Economics of Information: Incentives and Contracts," OUP Catalogue, Oxford University Press, edition 2, number 9780199243259.
    3. Edward Simpson Prescott, 1999. "A primer on moral-hazard models," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 47-78.
    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. Chopard, Bertrand & Cortade, Thomas & Langlais, Eric, 2010. "Trial and settlement negotiations between asymmetrically skilled parties," International Review of Law and Economics, Elsevier, vol. 30(1), pages 18-27, March.
    2. Barrie R. Nault & Rajeev K. Tyagi, 2001. "Implementable Mechanisms to Coordinate Horizontal Alliances," Management Science, INFORMS, vol. 47(6), pages 787-799, June.
    3. Inés Macho-Stadler & David Pérez-Castrillo, 2018. "Moral hazard: Base models and two extensions," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 16, pages 453-485, Edward Elgar Publishing.
    4. David Martimort & Aggey Semenov & Lars Stole, 2017. "A Theory of Contracts with Limited Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(2), pages 816-852.
    5. Gannon, Martin J. & Flood, Patrick C. & Paauwe, Jaap, 1999. "Managing human resources in the third era: Economic perspectives," Business Horizons, Elsevier, vol. 42(3), pages 41-47.
    6. Lionel Artige & Rosella Nicolini, 2008. "Memory in Contracts: The experience of the EBRD (1991-2003)," CREPP Working Papers 0803, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    7. Sande, Jon Bingen & Haugland, Sven A., 2015. "Strategic performance effects of misaligned formal contracting: The mediating role of relational contracting," International Journal of Research in Marketing, Elsevier, vol. 32(2), pages 187-194.
    8. Schnedler, Wendelin, 2003. "On the Prudence of Rewarding A While Hoping For B," Bonn Econ Discussion Papers 7/2003, University of Bonn, Bonn Graduate School of Economics (BGSE).
    9. Joon Mahn Lee & Rahul Kapoor, 2017. "Complementarities and Coordination: Implications for Governance Mode and Performance of Multiproduct Firms," Organization Science, INFORMS, vol. 28(5), pages 931-946, October.
    10. Jorge Aseff & Manuel Santos, 2005. "Stock options and managerial optimal contracts," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 813-837, November.
    11. Malik, Omar R., 2008. "Adapting to market liberalization: The role of dynamic capabilities, initial resource conditions, and strategic path choices in determining evolutionary fitness of Less Developed Country (LDC) firms," Journal of International Management, Elsevier, vol. 14(3), pages 217-231, September.
    12. Manuel Portugal Ferreira & Fernando A. Ribeiro Serra & Dan Li & Sungu Armagan, 2009. "Adaptation to the International Business Environment: A resource advantage perspective," Working Papers 38, globADVANTAGE, Polytechnic Institute of Leiria.
    13. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    14. Widener, Sally K., 2004. "An empirical investigation of the relation between the use of strategic human capital and the design of the management control system," Accounting, Organizations and Society, Elsevier, vol. 29(3-4), pages 377-399.
    15. Schneider, Udo & Zerth, Jürgen, 2008. "Improving prevention compliance through appropriate incentives," MPRA Paper 8280, University Library of Munich, Germany.
    16. Boadway, Robin & Marchand, Maurice & Sato, Motohiro, 2004. "An optimal contract approach to hospital financing," Journal of Health Economics, Elsevier, vol. 23(1), pages 85-110, January.
    17. Jie Ning & Volodymyr Babich, 2018. "R&D Investments in the Presence of Knowledge Spillover and Debt Financing: Can Risk Shifting Cure Free Riding?," Manufacturing & Service Operations Management, INFORMS, vol. 20(1), pages 97-112, February.
    18. Alexander Karaivanov, 2003. "Financial Contracts and Occupational Choice," Computing in Economics and Finance 2003 25, Society for Computational Economics.
    19. Meijerink, Gerdien W., 2007. "If services aren't delivered, people won't pay: the role of measurement problems and monitoring in Payments for Environmental Services," 106th Seminar, October 25-27, 2007, Montpellier, France 7948, European Association of Agricultural Economists.
    20. Nurlan Nurseiit, 2017. "The Consequences of the Choice of an Economic Model for the Development of CIS Countries," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(2), pages 110-140.

    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:aaea10:61362. 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.