Why Did Contracts Supplant the Cash Market in the Broiler Industry? An Economic Analysis Featuring Technological Innovation and Institutional Response
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Carolyn Dimitri
The decision to write contracts for production of commodities can be framed as an institutional response to changing industry and market conditions. When innovations increase available rents to technology owners (or technology appropriators), contracts can replace cash market transactions even though contracts carry higher transaction costs. We proceed by first fully documenting technological innovation in the broiler industry and tracing the evolution of contracts in the broiler industry. Next, we adopt a stylistic model to demonstrate how technological innovation might induce a switch to contract sales from cash market transactions. This paper contributes to the literature by investigating major institutional change in the broiler industry through an integrated analysis that weaves together industry history with elements of institutional economics, transaction cost theory, and game-theoretic economic analysis.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Article
- Generic Advertising in Markets with Informative Brand Advertising
- Product Proliferation in India's Cotton Seed Market: Are There Too Many Varieties?
- Complementarity among Alternative Procurement Arrangements in the Pork Packing Industry
- Can Risk Averse Competitive Input Providers Serve Farmers Efficiently?
- Buyer Power in U.K. Food Retailing: A 'First-Pass' Test
- Asymmetric Price Transmission, Market Power, and Supply and Demand Curvature
- Wine Brokers as Independent Experts
- Vertical Economies of Scope in Dairy Farming
- Why Did Contracts Supplant the Cash Market in the Broiler Industry? An Economic Analysis Featuring Technological Innovation and Institutional Response
