Contracts and Quality in the California Winegrape Industry

Rachael Goodhue, Dale M. Heien, Hyunok Lee and Daniel Sumner

Review of Industrial Organization, 2003, vol. 23, issue 3_4, 267-282

Abstract: We analyze the relationship between product quality and contracting choices using the results of a survey of California winegrape growers. Growers who produce high-quality grapes are more likely to use formal written contracts than are growers who produce low-quality grapes. Written contracts for high-quality grapes are more likely to include provisions regarding the production process, while written contracts for low-quality grapes are more likely to include explicit financial incentives for sugar content and other product attributes.

Date: 2003
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