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Vertically Aligned Vs. Open Market Coordination: Dominance Or Co-Existence?

Author

Listed:
  • Preckel, Paul V.
  • Boehlje, Michael
  • Gray, Allan W.
  • Kim, Sounghun
Abstract
Will a more tightly aligned system become the exclusive coordination or governance system in the pork industry? The analysis shows that the packer prefers to source hogs from both an aligned market and an independent market. This result is because the packer, facing variability in the demand for premium pork, must balance the cost of higher quality aligned hogs and independent hogs against the states of nature for demand for the premium product.

Suggested Citation

  • Preckel, Paul V. & Boehlje, Michael & Gray, Allan W. & Kim, Sounghun, 2004. "Vertically Aligned Vs. Open Market Coordination: Dominance Or Co-Existence?," 2004 Annual meeting, August 1-4, Denver, CO 20099, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:20099
    DOI: 10.22004/ag.econ.20099
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    References listed on IDEAS

    as
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    9. Martin, Laura L., 1999. "Navigating Production Contract Arrangements," Staff Paper Series 11591, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    10. Paarlberg, Philip L. & Boehlje, Michael & Foster, Kenneth A. & Doering, Otto C., III & Tyner, Wallace E., 1999. "Structural Change And Market Performance In Agriculture: Critical Issues And Concerns About Concentration In The Pork Industry," Staff Papers 28654, Purdue University, Department of Agricultural Economics.
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