Processor placements and producer incentives: analyzing broiler chicken production contracts

Rachael Goodhue, Gordon Rausser and Leo Simon

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: Recent theoretical work on agricultural contracts has utilized agency theory. Most of this work considers a moral hazard problem, and assumes that producers are homogeneous, so that there is no adverse selection problem. We utilize a sample of producer performance under a broiler production contract to confirm that heterogeneity exists. We model the principal's decision process and test predictions regarding how heterogeneity will affect the principal's decisions. We attempt to differentiate between symmetric and asymmetric information cases. We find some support for our hypotheses, including evidence that adverse selection may affect the processor's decisions.

Keywords: contract farming; decision-making; poultry; processing plants; Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2000-02-01
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Working Paper: Processor Placements and Producer Incentives: Analyzing Broiler Chicken Production Contracts (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:agrebk:qt2tc2g983

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