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Firms may seek contractual alternatives to vertical integration in order to achievetransactional economies or adjust for market imperfections. Blair and Kaserman have shown that under fixed-proportions production technology. Firms within bilateral and successive monopoly market structures can use formula price contractsto achieve results economically equivalent to integration. This paper examines whether formula price contracts are a viable alternative to forward integration for farmer cooperatives. Analysis of a three-stage vertical market structure indicates that the conditions under which a cooperative assembler can use a formula price contract are more restrictive than those for an investor-owned firm.

Subject(s): Agribusiness

Issue Date: 1993

Publication Type: Journal Article

PURL Identifier: http://purl.umn.edu/46390 Published in: Journal of Agricultural Cooperation, Volume 08 Page range: 28-38

Total Pages: 11

Record appears in: National Council of Farmer Cooperatives > Journal of Agricultural Cooperation





Autor: Royer, Jeffrey S. ; Bhuyan, Sanjib

Fuente: http://ageconsearch.umn.edu/record/46390?ln=en







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