The choice of contractual price mechanisms in uncertainty conditions: the case of Chilean fruit exports

Abstract : This article analyzes the choice of export-import contracts according to the price mechanisms. We study the determinants of the use two alternative contracts, firm sale (with ex-ante price), and consignment (price determined after sale at the importing country). The choice between of these arrangements allows firms to deal with the uncertainty of the international trade of complex products as perishable fruits. This study is framed in the Transactional Cost Economics, especially in the contract completeness literature. Using a binomial logit analysis of an exhaustive trade database, and information from 65 questionnaires survey and 39 interviews we show that the choice of contracts varies according to the region of destination, the risk of the importing country, and the time specificity of the product transacted (especially due to the perishability and seasonality).