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An Institutional Analysis Of Vertical Coordination Verses Vertical Integration: The Case Of The Us Broiler Industry

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  • Aust, Patricia

Abstract

This paper analyzes the situation, structure and performance of broiler production. The inherent interdependence in broiler production is high transactions costs. Two types of transactions costs, asset specificity with uncertainty and high information costs, are identified and explored. The performances of the alternative structures, vertical integration and vertical coordination, are outlined. In broiler production, vertical coordination is preferred by both firms and growers because it minimizes transactions costs. These conclusions are extended to other agricultural commodities, using pork and rice as examples.

Suggested Citation

  • Aust, Patricia, 1997. "An Institutional Analysis Of Vertical Coordination Verses Vertical Integration: The Case Of The Us Broiler Industry," Staff Paper Series 11670, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    • Handle: RePEc:ags:midasp:11670
    DOI: 10.22004/ag.econ.11670
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    References listed on IDEAS

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    1. 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.
    2. Richard L. Kilmer, 1986. "Vertical Integration in Agricultural and Food Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(5), pages 1155-1160.
    3. Kilmer, Richard L., 1986. "Vertical Integration In Agricultural And Food Marketing," 1986 Annual Meeting, July 27-30, Reno, Nevada 278083, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Unterschultz, James R., 2000. "New Instruments For Co-Ordination And Risk Sharing Within The Canadian Beef Industry," Project Report Series 24046, University of Alberta, Department of Resource Economics and Environmental Sociology.
    2. Erkan Rehber, 2000. "Vertical Coordination In The Agro-Food Industry And Contract Farming: A Comparative Study Of Turkey And The Usa," Food Marketing Policy Center Research Reports 052, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    3. Graversen, Jesper T. & Bramsen, Jens-Martin & Lund, Mogens & Sondergaard, Janus, 2004. "Securing Food Quality in the Danish Broiler Supply Chain - an Economic and Organizational Study," 84th Seminar, February 8-11, 2004, Zeist, The Netherlands 24997, European Association of Agricultural Economists.
    4. Gabor G. Szabo & Krisztina Bardos, 2005. "Vertical Coordination by Contracts in Agribusiness - An Empirical Research in the Hungarian Dairy Sector," CERS-IE WORKING PAPERS 0515, Institute of Economics, Centre for Economic and Regional Studies.
    5. Szabó G., Gábor & Bárdos, Krisztina, 2007. "Szerződéses kapcsolatok az élelmiszer-gazdaságban. A tejellátási lánc empirikus kutatása [Contract relations in the food economy. Empirical research into the milk-market supply channel]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 459-480.

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