Design of Production Contracts: Lessons from Theory and Agriculture -- Content -- Preface -- Introduction -- 1.1 The Theory of Contracting -- 1.2 The Practice of Contracting -- 1.3 Combining Theory and Practice -- 1.4 The Research Project -- 1.5 Readers Guide -- 1.6 Homepage -- 1.7 References -- Ten Rules of Thumb in Contract Design -- 2.1 Introduction -- 2.2 Contract Design -- 2.3 The Contracts -- 2.4 Ten Rules of Thumb -- 2.4.1 Coordinate production -- Examples -- 2.4.2 Balance the pros and cons of decentralization -- Examples -- 2.4.3 Minimize the costs of risk and uncertainty -- Examples
2.4.4 Reduce the costs of post-contractual opportunism -- Examples -- 2.4.5 Reduce the costs of pre-contractual opportunism -- Examples -- 2.4.6 Do not kill cooperation -- Examples -- 2.4.7 Motivate long-term concerns -- Examples -- 2.4.8 Balance pros and cons of renegotiation -- Examples -- 2.4.9 Reduce the direct costs of contracting -- Examples -- 2.4.10 Use transparent contracts -- Examples -- 2.5 Conclusion -- 2.6 References -- Contract Theory: A Holistic Approach -- 3.1 Introduction -- 3.2 The Overall Goal -- 3.3 Three Main Objectives -- 3.4 Coordination -- 3.4.1 Coordination of production
4.4 The Contract -- 4.5 Analysis of the Contract -- 4.5.1 Coordination -- 4.5.2 Risk sharing -- Sources of risk -- Risk borne by Danisco Foods -- Risk shared among all farmers -- Risk borne by the individual farmer -- 4.5.3 Moral hazard -- Opportunistic behavior from Danisco Foods -- Opportunistic behavior from the farmers -- 4.5.4 Hold-up -- 4.5.5 Discrimination -- 4.5.6 How should the groups be divided? -- 4.5.7 Yardstick competition -- 4.6 Conclusion -- 4.7 Appendix -- 4.7.1 The Current Contract -- 4.7.2 Yardstick Competition -- 4.8 References -- Contract Production of Specialty pigs
