Broiler Production Contracts as a Multi-Agent Problem: Common Risk, Incentives and Heterogeneity
The broiler industry presents two puzzles regarding production contracts: why do processors control growers' inputs, and why do they use a statistically insufficient estimator to calculate growers' compensation? This paper provides an agency theoretic framework that explains these puzzles...
| Publié dans: | American Journal of Agricultural Economics. - John Wiley and Sons, Inc.. - 82(2000), 3, Seite 606-622 |
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| Auteur principal: | |
| Format: | Article en ligne |
| Langue: | English |
| Publié: |
2000
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| Accès à la collection: | American Journal of Agricultural Economics |
| Sujets: | agency theory production contracts Mathematics Business Law Economics Biological sciences Behavioral sciences Physical sciences |
| Résumé: | The broiler industry presents two puzzles regarding production contracts: why do processors control growers' inputs, and why do they use a statistically insufficient estimator to calculate growers' compensation? This paper provides an agency theoretic framework that explains these puzzles in terms of processors' response to grower heterogeneity and production risk and to grower risk aversion. Processors control inputs to reduce the information rents paid to agents. By forcing agents to bear additional income risk through the use of an imprecise estimator, processors can increase profits, due to the combined moral hazard-adverse selection nature of the informational problem. |
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| ISSN: | 14678276 |