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Measuring the Importance of Transaction Costs in Cattle Marketing
Author(s) -
Hobbs Jill E.
Publication year - 1997
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 - 10.2307/1244266
Subject(s) - tobit model , transaction cost , variable cost , negotiation , outcome (game theory) , business , database transaction , variable (mathematics) , microeconomics , economics , marketing , industrial organization , econometrics , computer science , mathematics , mathematical analysis , programming language , political science , law
Transaction cost economics recognizes that transactions do not occur in a frictionless economic environment. Information, negotiation, and monitoring costs arise in any transaction and can influence the vertical coordination outcome. This paper demonstrates a method for measuring the influence of transaction costs on slaughter cattle marketing. The paper focuses on the factors affecting the choice between liveweight (live‐ring auction) and deadweight (direct‐to‐packer) sales. Using Tobit limited dependent variable analysis, data from a survey of UK farmers are used to estimate the relative importance of various transaction costs and farm characteristic variables for the choice of marketing channel.