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Measuring and Assessing Vertical Ties in the Agro‐food System
Author(s) -
Henderson Dennis R.
Publication year - 1994
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1994.tb00049.x
Subject(s) - interdependence , vertical integration , incentive , industrial organization , horizontal and vertical , distortion (music) , microeconomics , principal (computer security) , control (management) , economics , transaction cost , computer science , econometrics , environmental economics , mathematics , amplifier , computer network , geometry , management , bandwidth (computing) , political science , law , operating system
This paper examines the extent to which the concept of vertical coordination in the agro‐food sector lends itself to specification or measurement in a manner that is analytically useful. Based on a combination of theory and empirical evidence, it is suggested that vertical organization can be specified as a parameter, variable in degree of control by principal over agent. Such a specification has potential application in analytical models concerned with what gives rise to vertical ties and/or their economic consequences. Drawing principally on the concepts of transactions costs, factor price distortion, and vertical restraint, analytical attention is directed to the economic incentives for, and performance implications of the use of linkages other than spot market transactions for coordinating vertically interdependent stages in the food chain. Research challenges are identified.