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Agricultural Markets as Relative Performance Evaluation (1999)
| Citations: | 10 - 0 self |
BibTeX
@MISC{Hueth99agriculturalmarkets,
author = {Brent Hueth and Ethan Ligon},
title = {Agricultural Markets as Relative Performance Evaluation},
year = {1999}
}
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Abstract
Relative performance schemes (e.g., tournaments) are commonly used in markets for a variety of livestock and processing commodities, while explicit versions of these schemes are rarely (if ever) used in markets for fresh fruits and vegetables and specialty grains. We show how contracts for each of these latter commodities do in fact provide|via a payment mechanism which crucially depends on this existence of a market price -- relative performance incentives. In such an environment, compensation that is oered as some increasing function of market revenue implements a relative performance scheme by making each grower's payment an increasing function of his own output, but a decreasing function of others' output.
