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Media type:
E-Article
Title:
Producer Price Risk and Quality Measurement
Contributor:
Hueth, Brent;
Ligon, Ethan
Published:
Wiley, 1999
Published in:
American Journal of Agricultural Economics, 81 (1999) 3, Seite 512-524
Language:
English
DOI:
10.2307/1244011
ISSN:
0002-9092;
1467-8276
Origination:
Footnote:
Description:
AbstractRisk‐averse farmers in the produce industry grow a product whose market price is often quite unpredictable. Shippers or other intermediaries shield the farmer from much of this price risk; however, actual contracts between growers and shippers vary considerably across commodities in the residual price risk growers face. We hypothesize that imperfect quality measurement results in a moral hazard problem, and that price provides additional information regarding quality. As a consequence, an efficient contract does not shield growers from all idiosyncratic price risk. We examine this hypothesis for the case of fresh‐market tomatoes.