Economic Theory and Value Chain Governance

Alan de Brauw () and Erwin Bulte
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Alan de Brauw: International Food Policy Research Institute

Chapter Chapter 3 in African Farmers, Value Chains and Agricultural Development, 2021, pp 39-58 from Palgrave Macmillan

Abstract: Abstract Agricultural value chains take on several different organizational forms, from being dominated completely by spot markets to being vertically integrated within a single company. We consider a conceptual model of factors leading to different value chain governance structures; then we adapt this model to African value chains by considering contextual factors, such as the abundance of smallholders and the fear that market power often resides with the trader in African value chains. We note that relational contracting plays a very important role in African value chains; transactions along value chains in Africa are typically based on implicit, self-enforcing contracts with little or no third-party enforcement. Transaction costs that lead to relational contracting simply reflect the economic and technological conditions at play.

Keywords: Governance structures; Relational contracting; Market power; Transaction costs (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psachp:978-3-030-88693-6_3

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DOI: 10.1007/978-3-030-88693-6_3

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