Processor Placements and Producer Incentives: Analyzing Broiler Chicken Production Contracts

Posted: 10 Mar 2000

See all articles by Rachael E. Goodhue

Rachael E. Goodhue

University of California, Davis - Department of Agricultural and Resource Economics

Gordon C. Rausser

University of California, Berkeley - Department of Agricultural and Resource Economics

Leo K. Simon

U.C. Berkeley, Dept of Agricultural and Resource Economics

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.

JEL Classification: L14, Q13

Suggested Citation

Goodhue, Rachael E. and Rausser, Gordon C. and Simon, Leo K., Processor Placements and Producer Incentives: Analyzing Broiler Chicken Production Contracts. Available at SSRN: https://ssrn.com/abstract=213853

Rachael E. Goodhue

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
916-754-7812 (Phone)
530-752-5614 (Fax)

Gordon C. Rausser (Contact Author)

University of California, Berkeley - Department of Agricultural and Resource Economics ( email )

207 Giannini Hall no. 3310
Berkeley, CA 94720
United States
510-642-6591 (Phone)
510-643-0287 (Fax)

HOME PAGE: http://are.berkeley.edu/~rausser/

Leo K. Simon

U.C. Berkeley, Dept of Agricultural and Resource Economics ( email )

207 Giannini Hall
Berkeley, CA 94720
United States
510-642-8430 (Phone)
510-643-8911 (Fax)

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