Relational contracts and adaptation: application to a pork producer contract

Kostas Karantininis and Jesper T. Graversen
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Jesper T. Graversen: Institute of Food and Resource Economics (FØI), Faculty of Life Sciences (LIFE), University of Copenhagen (KU), Denmark, Postal: Institute of Food and Resource Economics (FØI), Faculty of Life Sciences (LIFE), University of Copenhagen (KU), Denmark

Agribusiness, 2008, vol. 24, issue 3, 342-354

Abstract: In this article, we apply a formal theoretical model of adaptation to an empirical setting within specialized pig production. The objective is to allocate decision rights ex ante so that actual decisions taken ex post will optimize the profit accruing to both parties in a contractual or integrative relation. Motivated by the situation in the market for piglets in Denmark, we focus on an analysis of a vertical partnership between a piglet producer and a finisher. By applying a model of adaptation to the particular setting, we provide a solid basis for discussions on both the importance of efficiently allocating decision rights and the usefulness of the partnership as organizational form between specialized pig producers. © 2008 Wiley Periodicals, Inc.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:24:y:2008:i:3:p:342-354

DOI: 10.1002/agr.20162

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