Formula Price Contracts as an Alternative to Forward Integration by Farmer Cooperatives Report as inadecuate




Formula Price Contracts as an Alternative to Forward Integration by Farmer Cooperatives - Download this document for free, or read online. Document in PDF available to download.

Firms may seek contractual alternatives to vertical integration in order to achievetransactional economies or adjust for market imperfections. Blair and Kaserman have shown that under fixed-proportions production technology. Firms within bilateral and successive monopoly market structures can use formula price contractsto achieve results economically equivalent to integration. This paper examines whether formula price contracts are a viable alternative to forward integration for farmer cooperatives. Analysis of a three-stage vertical market structure indicates that the conditions under which a cooperative assembler can use a formula price contract are more restrictive than those for an investor-owned firm.

Subject(s): Agribusiness

Issue Date: 1993

Publication Type: Journal Article

PURL Identifier: http://purl.umn.edu/46390 Published in: Journal of Agricultural Cooperation, Volume 08 Page range: 28-38

Total Pages: 11

Record appears in: National Council of Farmer Cooperatives > Journal of Agricultural Cooperation





Author: Royer, Jeffrey S. ; Bhuyan, Sanjib

Source: http://ageconsearch.umn.edu/record/46390?ln=en







Related documents