Producer Price Risk and Quality Measurement
Risk-averse farmers in the produce industry grow a product whose market price is often quite unpredictable. Shippers or other intermediaries shield the farmer from much of this price risk; however, actual contracts between growers and shippers vary considerably across commodities in the residual price risk growers face. We hypothesize that imperfect quality measurement results in a moral hazard problem, and that price provides additional information regarding quality. As a consequence, an efficient contract does not shield growers from all idiosyncratic price risk. We examine this hypothesis for the case of fresh-market tomatoes. Copyright 1999, Oxford University Press.
Year of publication: |
1999
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Authors: | Hueth, Brent ; Ligon, Ethan |
Published in: |
American Journal of Agricultural Economics. - Agricultural and Applied Economics Association - AAEA. - Vol. 81.1999, 3, p. 512-524
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Publisher: |
Agricultural and Applied Economics Association - AAEA |
Saved in:
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