Files
Abstract
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.