DO QUALITY INCENTIVES MATTER?

Corinne Alexander, Rachael Goodhue and Gordon Rausser

No 11946, Working Papers from University of California, Davis, Department of Agricultural and Resource Economics

Abstract: We utilize an unusual data set, involving fifteen tomato growers over four years, to analyze the impact of incentive contracts on behavior. Each grower delivers processing tomatoes under a price incentives contract and for a fixed price per ton. Our comparison of the quality of the tomatoes delivered under the two arrangements confirms that growers do respond to incentive contracts by improving tomato quality, as predicted by economic theory. The comparison is not confounded by the usual contract endogeneity and simultaneity problems, due to characteristics of the processing tomato industry and our data set.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 27
Date: 2000
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucdavw:11946

DOI: 10.22004/ag.econ.11946

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