Searching for Ratchet Effects in Agricultural Contracts

In a dynamic contracting environment, increasing standards over time in light of past performance is known as the ratchet effect Despite the recent theoretical attention given to the ratchet effect, models that include these effects have not been empirically tested against contract data. In this stu...

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Vydáno v:Journal of agricultural and resource economics Ročník 24; číslo 2; s. 536 - 552
Hlavní autoři: Allen, Douglas W., Lueck, Dean
Médium: Journal Article
Jazyk:angličtina
Vydáno: Western Agricultural Economics Association 01.12.1999
Témata:
agriculture
Cash
Community supported agriculture
Contract incentives
Crop economics
Crops
economic theory
Farm economics
farm leases
Farmers
land ownership
Landowners
mathematical models
moral hazard
Moral hazard models
principal-agent model
production economics
Ratchet effect
sharecropping
ISSN:1068-5502, 2327-8285
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Shrnutí:In a dynamic contracting environment, increasing standards over time in light of past performance is known as the ratchet effect Despite the recent theoretical attention given to the ratchet effect, models that include these effects have not been empirically tested against contract data. In this study, we use farm-level data on modern Great Plains agricultural cash rent and cropshare contracts to test for the presence of ratchet effects in the context of a principal-agent model with moral hazard. We find limited evidence for the ratchet effect within share contracts, and no evidence that it is important for the choice of contract between cash rent and cropshare.
Bibliografie:ObjectType-Article-1
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ISSN:1068-5502
2327-8285
DOI:10.22004/ag.econ.30796