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Conference papers

Delayed adoption of specific practices in uncertain environments: the case of the fresh fruit and vegetables in Turkey

Abstract : Contractual arrangements aiming at decreasing the probability of investment hold-up were widely studied in stable environments. However, when contract enforcement is impracticable, like in some developing countries, agents cannot rely on expressed terms to ensure their transaction against opportunism. We show analytically that, in these highly uncertain environments, the delay in the investment decision related to specific practices can overcome the risk of hold-up. Whereas the existing literature mostly assumes that investment decision and governance choice are made simultaneously by players, we focus on the information exchange in repeated transactions as a way to decrease the uncertainty governing the transaction. When learning about market outlets, the supplier is more likely to implement investments specific to a particular buyer. We collected data from 205 wholesale markets' brokers (commissioners) in the most important fresh fruit and vegetables producing regions in Turkey in 2006. We implement a two-stage econometric method to assess the question: we distinguish thereby between the decision to engage in the transaction with supermarkets and the decision to invest in relationship specific practices required by supermarkets. We find statistical evidence for the sequentiality of investment decisions. However, the empirical results mitigate our hypothesis. The period at which the relationship between the wholesale market agent and the supermarket begins is more important then the duration of this relationship. We draw from this result that the demand of the supermarkets evolves, and that market conditions should be taken into account.
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Conference papers
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https://hal.inrae.fr/hal-02820080
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Submitted on : Saturday, June 6, 2020 - 5:49:07 PM
Last modification on : Friday, April 22, 2022 - 11:56:52 AM

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  • HAL Id : hal-02820080, version 1
  • PRODINRA : 19292

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Celine Bignebat, Jean Marie Codron, Sylvaine Lemeilleur, . Societe Francaise d'Economie Rurale, . International Society For New Institutional Economics. Delayed adoption of specific practices in uncertain environments: the case of the fresh fruit and vegetables in Turkey. 1. Journées INRA-SFER de recherches en sciences sociales, Dec 2007, Paris, France. 30 p. ⟨hal-02820080⟩

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