REGULATING BROILER CONTRACTS: TOURNAMENTS VERSUS FIXED PERFORMANCE STANDARDS
Theofanis Tsoulouhas and
Tomislav Vukina ()
No 21833, 2000 Annual meeting, July 30-August 2, Tampa, FL from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)
Grower discontent with tournaments as mechanisms for settling poultry contracts can largely be attributed to the group composition risk that tournaments impose on growers. This paper focuses on the welfare effects of a widely advocated regulatory proposal to prevent integrator companies from using tournaments and replace them with schemes that compare performance to a fixed standard. The analysis shows that whereas the mandatory replacement of tournaments with fixed performance standards, absent any other rules, can decrease grower income insurance without raising welfare, replacing tournaments with fixed performance standards can simultaneously increase income insurance and welfare, provided that the piece rate is correctly specified.
Keywords: Industrial Organization; Livestock Production/Industries (search for similar items in EconPapers)
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Journal Article: Regulating Broiler Contracts: Tournaments Versus Fixed Performance Standards (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea00:21833
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