Abstract
Studies of hog industry structure often invoke risk reduction and transaction costs explanations
for empirical observations but fail to directly examine the core concepts of risk behavior and
transaction costs theories. Using a more unified conceptual framework and unique survey and
accounting data, this study demonstrates that that risk preferences and asset specificity impact
Illinois producers¿ use of contracts and spot markets as suggested by theory. Factor analytic
methods limit measurement error for indirectly observable risk and transaction costs variables
employed in logit regressions. In particular, related investments in specific hog genetics and
specific human capital regarding the production process increase the probability of selecting
long-tem contracts over spot markets. Producers who perceive greater levels of price risk
and/or are more averse to it appear more (less) likely to use long-term contracts (spot markets),
and hence, to make such investments.
Original language | English |
---|---|
Publication status | Published - 2008 |
Event | Applied Commodity Price Analysis, Forecasting, and Market Risk Management. - Duration: 21 Apr 2008 → 22 Apr 2008 |
Conference/symposium
Conference/symposium | Applied Commodity Price Analysis, Forecasting, and Market Risk Management. |
---|---|
Period | 21/04/08 → 22/04/08 |