MEASURING AND ASSESSING VERTICAL TIES IN THE AGROFOOD SYSTEM

This paper examines the extent to which the concept of vertical coordi nation in the agro-food sector lends itself to specification or measur ement in a manner that is analytically useful. Based on a combination of theory and empirical evidence, it is suggested that vertical organi zation can be specified as a parameter, variable in degree of control by principal over agent. Such a specification has potential applicatio n in analytical models concerned with what gives rise to vertical ties and/or their economic consequences. Drawing principally on the concep ts of transactions costs, factor price distortion, and vertical restra int analytical attention is directed to the economic incentives for, a nd performance implications of the use of linkages other than spot mar ket transactions for coordinating vertically interdependent stages in the food chain. Research challenges are identified.