Can Rank-Order Tournaments Improve Efficiency of Quality Differentiated Crop Markets Under Marketing Loan Program Operation? The Case of U.S. Peanuts

Denis A. Nadolnyak, Stanley M. Fletcher and Cesar Revoredo-Giha

No 24703, 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark from European Association of Agricultural Economists

Abstract: In the paper, alternative contractual arrangements between crop producers and processors are evaluated with a view of addressing the major issues present in peanut markets in the U.S., the major EU supplier of high quality peanuts. The issues are the thinness of the spot markets and the absence of quality premiums, both of which impair market efficiency. Results indicate that introducing contracts with a system of quality differentials creates incentives for producer self-selection to participate in the post harvest cash market. Moreover, in the presence of sufficiently high common production risk, tournament contracts are more efficient and preferred by the producers than the standard fixed premium schedules.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 12
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae05:24703

DOI: 10.22004/ag.econ.24703

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