Transaction-cost economics and the organization of agricultural transactions

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Abstract
This chapter discusses the logic, hypotheses, empirical methods, and principal findings of the transaction-cost approach to economic organization as a foundation for analyzing the organization of agricultural transactions. In contrast to textbook characterizations of agriculture as the quintessential spot market, agricultural transactions display a broad range of governance arrangements. The chapter traces the use of these arrangements to the location-specific nature of investments and, especially, to temporal specificities associated with the perishability of many agricultural products. Case studies of the governance of fruit, vegetable, and dairy processing; the emergence of multinational firms in the banana trade; the evolution of contractual relations between tuna harvesters and processors; and the governance of transactions between cattle feedlots, slaughtering, and beef fabrication operations illustrate the arguments.