Relationship of the Interests between the Dairy Farmer and the Company in Ecological Agriculture －A Case of the Dairy Industry in Sichuan Province, China

Jia-Wei Chen and Yan-bin Qi

Asian Agricultural Research, 2010, vol. 02, issue 08, 5

Abstract: Development status of dairy industry in Sichuan Province, China is analyzed, indicating that how to ensure the high-quality and ecological production of peasant households has become an important issue for the safety and healthy of the masses and the development of dairy industry. Game model is established and the solution for the model is obtained. Based on analyzing the relationship of the interests between the dairy farmer and the company in ecological agriculture, two mixed strategies of Nash equilibrium are obtained. One is that when the probability is equal to , there are no differences between purchasing or not purchasing; if the probability of company purchase is equal to , there are no differences between producing high-quality milk and poor-quality milk. The other is that if the probability of dairy farmer under normal transaction is equal to , there are no differences for the company to select high-quality inspection or low-quality inspection; if the probability of high-quality inspection is equal to , passing off inferior milk as high-grade one has no differences with normal transaction. Therefore, moral risk of the dairy farmer should be prevented by probability and high-quality inspection. Finally, countermeasures are put forward, such as reducing the risk of transaction, ensuring the basic interest of the dairy farmer engaged in ecological production, intensifying the supervision, correctly preventing the moral risk of dairy farmer, improving the laws and regulations, and coordinating interests between dairy farmer and company in industrial chain.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ags:asagre:97625

DOI: 10.22004/ag.econ.97625

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