Oligopsony Power, Asset Specificity, and Hold-Up: Evidence from the Broiler Industry

Tomislav Vukina and Porametr Leegomonchai

American Journal of Agricultural Economics, 2006, vol. 88, issue 3, 589-605

Abstract: In this article we look for empirical evidence of hold-up in broiler industry production contracts by using the cross-sectional national survey of broiler growers. First, we focus on the problem of under-investment and hypothesize that the degree of agent's (grower's) under-investment systematically depends on the principal's (integrator's) market power and the level of asset specificity. Second, we provide an indirect test of hold-up by looking at the grower contract payoffs as a function of the frequency of the housing facilities upgrade requests and the principal's market power. The results show moderate empirical support for the presence of hold-up. Copyright 2006, Oxford University Press.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:88:y:2006:i:3:p:589-605

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