Premium
Oligopsony Power, Asset Specificity, and Hold‐Up: Evidence from the Broiler Industry
Author(s) -
Vukina Tomislav,
Leegomonchai Porametr
Publication year - 2006
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2006.00881.x
Subject(s) - asset (computer security) , investment (military) , principal (computer security) , market power , economics , production (economics) , empirical evidence , business , microeconomics , monopoly , computer security , politics , computer science , political science , law , operating system , philosophy , epistemology
In this article we look for empirical evidence of hold‐up in broiler industry production contracts by using the cross‐sectional national survey of broiler growers. First, we focus on the problem of under‐investment and hypothesize that the degree of agent's (grower's) under‐investment systematically depends on the principal's (integrator's) market power and the level of asset specificity. Second, we provide an indirect test of hold‐up by looking at the grower contract payoffs as a function of the frequency of the housing facilities upgrade requests and the principal's market power. The results show moderate empirical support for the presence of hold‐up.