Reducing Hold-up Risks in Ethanol Supply Chains: A Transaction Cost Perspective

Simon Weseen, Jill Hobbs and William Kerr

International Food and Agribusiness Management Review, 2014, vol. 17, issue 2, 24

Abstract: Ethanol plants sit at the intersection of three main supply chains, involving the procurement of feedstocks and the marketing of ethanol and distillers grains. A transaction cost framework assesses the extent to which uncertainty, asset specificity, and transaction frequency create incentives for opportunistic behavior by exchange partners leading to problems of hold-up. Using case study evidence from the western Canadian ethanol sector, solutions to the hold-up risks facing ethanol plants are explored. Contracting and integration feature strongly in downstream output markets. The positioning of the ethanol enterprise within a firm’s overall business model, whether as a stand-alone investment or as a forward or backward integration strategy, is an important consideration for future supply chain research in this sector.

Keywords: Agribusiness; Crop Production/Industries; Demand and Price Analysis; Farm Management; Livestock Production/Industries; Production Economics; Productivity Analysis (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifaamr:167906

DOI: 10.22004/ag.econ.167906

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