The yield/quality trade-off and contractual choice

Marta Fernandez Olmos, Jorge Rosell-Martinez, Manuel Antonio Espitia-Escuer, Marta Fernandez Olmos, Jorge Rosell-Martinez, Manuel Antonio Espitia-Escuer
2008 unpublished
This paper provides an analysis of the choice of governance mechanism in agriculture using an integrated perspective based on agency theory. The main ways of organizing agriculture are compared: spot market and incentive contract. With the analytical development of both models, it is explored that the choice of the optimal mechanism depends on initial conditions such as uncertainty, the risk aversion of the agents or the number of competitors. Moreover, according to the predictions made by the
more » ... conomic literature on agrarian organization, the results support the coexistence of both governance alternatives.
doi:10.22004/ag.econ.6065 fatcat:2t2xzk2o7ngariud5lifn5oe5u