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Contract theory and agricultural policy analysis: a discussion and survey of recent developments *
Author(s) -
Wu Steven Y.
Publication year - 2006
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/j.1467-8489.2006.00317.x
Subject(s) - legislation , government (linguistics) , contract theory , agriculture , economic interventionism , key (lock) , public economics , intervention (counseling) , economics , business , political science , microeconomics , computer science , law , politics , biology , psychology , ecology , philosophy , linguistics , computer security , psychiatry
This paper surveys some recent developments in contract theory and illustrates how this theory might be useful for conceptualising policy issues related to vertical coordination and contracting in the agro‐food industry. The article begins by surveying contract theory to identify key economic distortions that can potentially justify government involvement. Next, the general ingredients of agricultural contracts that are most likely to create inefficiencies are discussed. Finally, controversial aspects of real‐world agricultural contracts are highlighted and lessons from the theory are used to determine whether government intervention is justified. Actual legislation that has been proposed in the USA is analysed where appropriate and topics that await further research are also discussed.