Contract theory and agricultural policy analysis: a discussion and survey of recent developments *

Steven Wu

Australian Journal of Agricultural and Resource Economics, 2006, vol. 50, issue 4, pages 490-509

Abstract: This paper surveys some recent developments in contract theory and illustrates how this theory might be useful for conceptualising policy issues related to vertical coordination and contracting in the agro-food industry. The article begins by surveying contract theory to identify key economic distortions that can potentially justify government involvement. Next, the general ingredients of agricultural contracts that are most likely to create inefficiencies are discussed. Finally, controversial aspects of real-world agricultural contracts are highlighted and lessons from the theory are used to determine whether government intervention is justified. Actual legislation that has been proposed in the USA is analysed where appropriate and topics that await further research are also discussed. Copyright 2006 The Author
Journal compilation 2006 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd .

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