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Staff Publications

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    'Staff publications' is the digital repository of Wageningen University & Research

    'Staff publications' contains references to publications authored by Wageningen University staff from 1976 onward.

    Publications authored by the staff of the Research Institutes are available from 1995 onwards.

    Full text documents are added when available. The database is updated daily and currently holds about 240,000 items, of which 72,000 in open access.

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    Shocks, preferences, and institutions: experimental evidence from Sub-Saharan Africa
    Cecchi, F. - \ 2015
    Wageningen University. Promotor(en): Erwin Bulte. - Wageningen : Wageningen University - ISBN 9789462572621 - 198
    ontwikkelingseconomie - afrika ten zuiden van de sahara - institutionele economie - experimenten - veldwerk - keuzegedrag - verandering - shock - conflict - economische analyse - development economics - africa south of sahara - institutional economics - experiments - field work - choice behaviour - change - shock - conflict - economic analysis

    Both preferences and institutions are central to economic theory. Insofar as they cannot be taken as given, it is important to understand how they are formed, and how they “respond” to shocks. This thesis investigates the endogenous formation of preferences and institutions. It presents field-experimental evidence from Sub-Saharan Africa – specifically Uganda, Sierra Leone, and Ethiopia – gradually zooming out through different levels of responses to shocks. It starts by looking at the formation of individual preferences in utero and during childhood. Next, it explores the endogeneity of rational choice among adults. Finally, it looks at the cumulative outcome of these responses in terms of changes in local norms and informal institutions. Shocks are thought of in their broadest possible definition. Conflict is a shock, but so is the introduction of exogenously planned and implemented institutions, or the penetration of statutory law into predominantly customary settings.

    Chapter 2 investigates the fetal origins of preferences for cooperation. I study the effect of prenatal trauma on the cooperation of those born during the Lord’s Resistance Army insurgency in northern Uganda. I find that a rise in the relative length of the index finger with respect to the ring finger – a marker for prenatal hormonal shock – reduces the child’s probability of contribution to the public good. I interpret this as evidence that prenatal trauma may affect later-life individual preferences, and that the nine months in utero may be more important than previously thought.

    Chapter 3 looks at the preferences for competition towards in- and out-groups, in relation to conflict exposure. I study aggressiveness and willingness to compete among youth in Sierra Leone, using the group dynamics generated by a local football tournament to separate in- and out-group behavior. I find that football players that experienced more intense exposure to violence are more likely to get a foul card during a game. Also, I isolate competitiveness from aggressiveness in the lab, and find that conflict exposure increases the willingness to compete towards the out-group—not the in-group. I conjecture that violent conflict is not only a destructive process, but that it may also trigger autonomous transformations in believes and preferences.

    Chapter 4 explores the endogeneity of rational choice among adults. I study the relationship between market exposure and rationality in rural Ethiopia, through a laboratory experiment involving sesame brokers and farmers. Following a randomly assigned trading session in a competitive auction, I find that farmers and brokers selected for the treatment behave more rationally than their peers in the control group. Markets are thus not only neutral institutions; they change the way people make decisions. I speculate that, in the presence of endogenous rationality, a rapid market expansion may offer dynamic efficiency gains, but that it may also affect the distribution of rents and wealth at the local and regional levels.

    Chapter 5 investigates the relationship between formal and informal institutions. I study the dynamics of social capital – proxied by contributions to a public goods game – in response to the introduction of a formal insurance scheme in southwestern Uganda. I find that formal insurance crowds-out social capital, but that it is not those adopting the formal insurance who reduce their contributions (as predicted by theory). Instead, social capital erodes because of the uninsured. I argue that this is consistent with “weapons of the weak” theories, emphasizing social embeddedness. Those who fear to lose from this inequality-increasing innovation respond with the only “weapons” at hand—by reducing cooperation in other domains.

    Chapter 6 looks at how the penetration of formal law affects customary legal institutions. I study the effects of introducing a formal legal alternative on the arbitration decisions of real customary judges in Ethiopia. I find that introducing a legal fallback reduces arbitration biases and draws the decisions of customary judges significantly closer to the formal law. At the same time, agents disfavored by the custom do not take advantage of their increased bargaining power. I argue that most effects of increased competition between formal law and customary legal institutions may rise from changes in the latter, rather than from plaintiffs seeking justice under the rule of law.

    While each chapter is envisioned as a self-standing contribution to economic literature, the crosscutting thread is equally crucial. Not always do endogenous responses to shocks fit existing economic theory. Rather, the evidence presented sometimes highlights unforeseen dynamics. It moreover strongly rejects the notion of passive acceptance of shocks; individuals and institutions “respond” to shifting circumstances through “rational” – although not necessarily conscious – behavioral changes. These findings contribute to the understanding of the micro-foundations of preferences and institutions, and emphasize the need to continuously underpin theoretical predictions with empirical evidence.

    Social capital, agricultural innovation and the evaluation of agricultural development initiatives
    Rijn, F.C. van - \ 2014
    Wageningen University. Promotor(en): Erwin Bulte, co-promotor(en): Marrit van den Berg. - Wageningen : Wageningen University - ISBN 9789461739094 - 185
    ontwikkelingseconomie - sociaal kapitaal - landbouwontwikkeling - plattelandsontwikkeling - innovaties - afrika ten zuiden van de sahara - institutionele economie - rwanda - uganda - democratische republiek kongo - landbouw - sociale netwerken - economische ontwikkeling - development economics - social capital - agricultural development - rural development - innovations - africa south of sahara - institutional economics - rwanda - uganda - congo democratic republic - agriculture - social networks - economic development

    In this thesis, I show that social capital has an important role in the evaluation of development initiatives targeting agricultural innovation. Social capital and agricultural innovation are naturally linked from an innovation system perspective in which innovations result from the integration of knowledge from various actors and stakeholders. In chapter 1, I identify the three research questions upon which this thesis is based. First, how are social capital and agricultural innovation related? Second, can development initiatives increase agricultural innovation by building social capital? Third, does the initial level of social capital increase the success of these development initiatives in enhancing agricultural innovation? These question mainly relate to the increasing number of policies, programs and project that include beneficiaries in the design, management and decision making process.

    In chapter 2, I elaborate on the main concepts underlying this thesis including social capital, how it relates to development initiatives in the agricultural sector, and how it can be measured. I broadly define social capital as the participation of individuals in formal and informal networks, the norms that define these networks and the trust these individuals have within and outside these networks. Participation in networks is structural social capital, whereas norms and trust within and between these networks is cognitive social capital. I distinguish four dimensions of social capital: structural bonding, structural bridging, cognitive bonding and cognitive bridging. In this thesis bonding and bridging social capital is akin to social capital inside and outside the village. Agricultural innovation is defined in terms of improved land and crop management practices, an important area of agricultural innovation for small scale producers.

    In chapter 3 till 7, I empirically investigate the relationships between social capital, agricultural innovation and two types of development initiatives. The first initiative is the implementation of agricultural research through the Integrated Agricultural Research for Development (IAR4D) approach. IAR4D was adopted by the Sub Saharan African Challenge Program (SSA CP) and implemented in eight different countries. The core of this approach is the development of Innovation Platforms (IPs), which can be described as an informal coalition and alliance of conventional agricultural research and development actors. Using the semi experimental data collected in this context, I could investigate the important role of social capital in different contexts. The second type of initiative is implementation of sustainable certification schemes through group-based experimental learning approaches. I investigate four sustainable coffee projects in Vietnam, of which two adopted the interactive Farmer Field School training approach. The data of these four projects allow me to verify some of the conclusions in a different context and for a different development initiative.

    In chapter 3, I use baseline data from the IAR4D initiative to explore the association between different forms of social capital and uptake of various agricultural innovations, for a sample of 2500 households in seven countries in SSA. I find that structural bridging social capital is associated with more extensive adoption of agricultural innovations. This result is true for the pooled model as well as for four of the seven country models. This form of social capital captures agriculture-related links creating access to knowledge and resources and is considered an important dimension of economic development. I find a negative association between cognitive bonding social capital and the innovation index. This finding could represent a potentially harmful side of social capital in terms of agricultural innovation.

    In chapter 4, I investigate the impact of IAR4D on social capital. I narrow my focus on the border region between Rwanda, Uganda and the DRC. Because the SSA CP data set consist of randomized data of participating and non-participating villages, before and two years after implementation, I can investigate the impact of the program. Many participatory projects in rural Africa are efforts to enhance development indirectly by promoting cooperation in formal or informal networks, and by encouraging trust and norms of behaviour towards mutually beneficial action. But it remains unclear whether external interventions can actually influence social capital, especially in the short term. I show that IAR4D has had a positive impact on structural bridging social capital in DRC and Uganda. There was no impact on structural bridging social capital in Rwanda, or on the other dimensions of social capital. Finally, I showed that traditional agricultural extension has been less successful in increasing structural social capital than IAR4D.

    In chapter 5, I use data from a survey I conducted among IP coordinators to measure the extent to which IPs were implemented according to the principles of IAR4D across the three sub regions. Linking these data to the main survey data, I find that the extent to which IPs were implemented according to IAR4D principles is associated with the success of IAR4D in increasing the level of household food security, although not through increased adoption of agricultural innovation or increased levels of social capital at household level. Looking at the sub-components of these principles, especially involvement of IP stakeholder is crucial. Tentative results suggest that this involvement is higher in communities with a higher level of education, a higher percentage of female headed households, and a higher level of village social capital.

    In chapter 6, I analyse how different indicators used to represent social capital are related in the border region between Rwanda, Uganda and the DRC. I focus on the relationship between various indicators of trust, an important component of cognitive social capital, and group membership, an important component of structural social capital. The indicators used are based on questions I added to the follow up survey of the SSA CP in 2010. I find that different indicators of trust and group membership cannot be empirically captured by an overarching social capital factor, and are not even necessarily associated to each other.

    In chapter 7, I present evidence that the relationship between social capital and agricultural innovation is not only evident for the IAR4D approach, but also for a different development initiative in a different context: sustainable coffee certification in Vietnam. I use data collected among 240 randomly selected project participants and 150 comparable farmers that did not participate in the projects. I focus on the role of bonding and bridging cognitive social capital, defined as trust. I find a significant positive relation between trust and the uptake of sustainable agricultural training practices. This relationship mostly results from high levels of bridging trust, and is even higher in combination with high levels of bonding trust. I also find tentative evidence that participation in the sustainable coffee projects positively influenced bonding trust in one project whereas it negatively influenced bridging trust in another project.

    In chapter 8, I give an overview of the three main findings. First, social capital is associated with agricultural innovation. Second, development initiatives can influence social capital. Third, the existing level of social capital is associated with the success of development interventions. However, the effect was not necessarily positive and depends greatly on the dimension of social capital.

    I also present several implications for policy. First, stimulating social capital, especially bridging social capital, may be a natural leverage point for policy makers to promote agricultural development. Second, increased levels of social capital can indeed be an outcome of development initiatives, either intentionally or not. At the same time, I show that this impact requires specific efforts and is not necessarily positive. The third implication is that social capital matters for the success of certain development initiatives, either as a source of heterogeneous implementation or impact. Fourth, it is vital to take into account the multi-dimensional nature of social capital and the fact that these dimensions might have different relations to agricultural innovation and development initiatives. Combined these implications mean that indicators of social capital should be included in the design and evaluation of agriculture-related development initiatives.

    Finally, I give suggestion for future research. First, to further unravel the chains of causation between different dimensions of social capital, agricultural innovation, and development initiatives. Second, to validate the indicators and indices of social capital using experimental games, more advanced survey questions, or better embedding them in existing theories. A third area of future is to advance in the measurement of innovation as a truly interactive and participatory process. Fourth, to address whether the importance of social capital, as a catalyst for success or as an outcome variable, depends on the nature of the development initiatives or the context in which it is implemented. Finally, research yet has to address the long-run effect of development initiatives on social capital.

    Institutions in the Mexican coffee sector : changes and responses
    Rodriguez Padron, B. - \ 2012
    Wageningen University. Promotor(en): Erwin Bulte; Ruerd Ruben, co-promotor(en): Kees Burger. - [S.l.] : s.n. - ISBN 9789461734181 - 201
    instellingen - institutionele economie - mexico - koffie - landbouwsector - verandering - samenwerking - contracten - diversificatie - onzekerheid - markten - markthandelaars - institutions - institutional economics - mexico - coffee - agricultural sector - change - cooperation - contracts - diversification - uncertainty - markets - market traders

    Keywords: Cooperation, contract arrangements, traders´ performance, market uncertainty, diversification, coffee, Mexico.

    The main aim of this thesis is to investigate the institutional environment prevailing in the Mexican coffee sector and its effect on the producers, traders and households. Specific topics we examine are the contract arrangements and trade performance, the factors influencing the growers´ willingness to join a cooperative, the effects of cooperation on price variability, the influence of cooperation on the growers’ welfare, and coffee producers’ response to the falling coffee price through their engagement in diversification activities. To accomplish the main objectives we have used primary and secondary data. We applied ordinarily least squares, logistic, probit and multivariate probit regressions in the analysis. The main findings indicate that farmers were better off under the quota system than they are under the free market. Results also indicate that being a roaster and selling cherry coffee negatively affects traders’ use of contracts, whereas being vertically integrated has a positive effect on contracting. On the other hand, selling cherry coffee, participating in a competitive environment and having contracts positively influence intermediaries’ performance. Other results show that some individual, family and farm factors, as well as variability of the coffee price at the municipal level favour cooperative affiliation; whereas housing conditions, the proportion of farmers in the municipality and the level of producers selling to intermediaries at the municipal level negatively affect prospects for cooperative membership. We discovered overall positive effects of cooperative participation on household welfare through an increase in the price and total coffee income; results also indicate that households responded to the low coffee price periods with an increase in diversification.

    Institutions, violent conflict, windfall gains and economic development in Africa
    Voors, M.J. - \ 2011
    Wageningen University. Promotor(en): Erwin Bulte. - [S.l.] : s.n. - ISBN 9789461731029 - 166
    ontwikkelingseconomie - economische ontwikkeling - instellingen - institutionele economie - conflict - afgewaaid fruit - oorlog - corruptie - development economics - economic development - institutions - institutional economics - conflict - windfalls - war - corruption - cum laude
    cum laude graduation (with distinction)
    Farmers, institutions and land conservation : institutional economic analysis of bench terraces in the highlands of Rwanda
    Bizoza Runezerwa, A. - \ 2011
    Wageningen University. Promotor(en): Erwin Bulte, co-promotor(en): Paul Hebinck. - S.l. : s.n. - ISBN 9789085859307 - 123
    ontwikkelingseconomie - boeren - institutionele economie - instellingen - landbouwgrond - bodembescherming - waterbescherming - erosie - terrassen - rwanda - oost-afrika - minst ontwikkelde landen - development economics - farmers - institutional economics - institutions - agricultural land - soil conservation - water conservation - erosion - terraces - rwanda - east africa - least developed countries
    Shocks, civil war and economic development in Sub-Saharan Africa
    Nillesen, E.E.M. - \ 2010
    Wageningen University. Promotor(en): Erwin Bulte, co-promotor(en): P. Verwimp. - [S.l. : S.n. - ISBN 9789085856597 - 134
    economische ontwikkeling - oorlog - conflict - instellingen - ontwikkelingshulp - ontwikkelingsbeleid - overheidsbeleid - burundi - centraal-afrika - minst ontwikkelde landen - ontwikkelingslanden - ontwikkelingseconomie - institutionele economie - governance - economic development - war - conflict - institutions - development aid - development policy - government policy - burundi - central africa - least developed countries - developing countries - development economics - institutional economics - governance
    Foreign aid, low institutional quality and civil wars are associated with slow economic development in many Sub-Sahara African countries. I aim to identify causal relations and mechanisms that explain significant correlations. I use both macro- and micro-economic data and show that results are not necessarily far apart.
    I assess the influence of foreign aid using macro-level data of 30 Sub-Saharan African countries. Opponents argue that foreign aid corrupts, and will end up in the hands of a small elite. Institutional quality (e.g. corruption) will hence deteriorate, thereby adversely affecting economic growth. Even worse, the inflow of foreign exchange can presumably induce civil warfare or prolong existing wars. My outcomes suggest that aid reduces corruption the next year. Consistent with several accounts from small-scale development programs, impacts however disappear once donors reduce monitoring efforts.
    What about an alleged relation between foreign aid and civil war? Foreign aid does not influence the probability that a war will start but reduces the probability that ongoing wars continue the next year. The result on war start-ups speaks against the idea that aid motivates rebels that want to “grab” the money by getting into power. This cross-national (macro) result is consistent with micro-level results I find for rebellion in Burundi. Variation in appropriable export rents shows no robust relation with rebellion. Lower incomes however do promote rebellion; fighting may then suddenly become an attractive alternative to farming.
    The micro-level data from Burundi also allow examining people’s behaviour after warfare. Wars are destructive, but exposure to war violence appears to improve social relations within communities and promote investment in risky, more profitable, cash crops. These results could be interpreted as evidence of rapid (macro)-economic post-war recovery as recently observed in Sierra Leone, Rwanda, Mozambique and Angola.
    The dissertation challenges some conventional beliefs about key themes in development economics and policy. The results may help rethink researchers, policy-makers and donors about future paths to sound development.
    Markets, marketing and developing countries : where we stand and where we are heading
    Trijp, J.C.M. van; Ingenbleek, P.T.M. - \ 2010
    Wageningen : Wageningen Academic Publishers - ISBN 9789086861453 - 192
    economische ontwikkeling - ontwikkelingslanden - markten - marketing - landhervorming - marketing van voedingsmiddelen - landbouwhervorming - instellingen - marktonderzoek - institutionele economie - fair trade - economic development - developing countries - markets - marketing - land reform - food marketing - agrarian reform - institutions - market research - institutional economics - fair trade
    Markets are increasingly seen as vehicles to solve problems in developing countries. For example, improvements in market performance make potentially important contributions to achieve the Millennium Development Goals. Access of smallholders to well-functioning markets is increasingly expected to contribute to poverty alleviation and improvement of both food security and environmental sustainability. This book presents the views of leading experts on where we stand and where we are heading in the field of markets, marketing and developing countries. Twenty essays in this book describe the role of marketing in achieving development goals, the track record of past market policies, the current functioning of value chains, the roles that market institutions play to facilitate market access for smallholders, as well as the potential to add value to farm produce through certification schemes, new technologies or innovation systems. The book is published in honour of the retirement of Aad van Tilburg, one of the pioneers in the field of marketing in developing countries. Early on in his career Van Tilburg recognised that improvements in the functioning of markets and marketing can be key to economic development with special reference to the livelihood of small producers and other market actors in developing countries.
    Workbook Institutional Economics and Economic Organisation Theory; an integrated approach
    Slangen, L.H.G. ; Heringa, P.W. - \ 2009
    Wageningen : Wageningen Academic Publishers - ISBN 9789086861200 - 176
    instellingen - economische theorie - sociaal-economische organisatie - contracten - eigendomsrechten - eigendom - institutionele economie - economische organisatietheorie - institutions - economic theory - socioeconomic organization - contracts - property rights - ownership - institutional economics - economic organization theory
    The organisation of transactions : studying supply networkd using gaming simulation
    Meijer, S.A. - \ 2009
    Wageningen University. Promotor(en): Onno Omta; George Beers, co-promotor(en): Gert Jan Hofstede. - [S.l.] : S.n. - ISBN 9789085853343 - 211
    bedrijfsvoering - speltheorie - ketenmanagement - netwerken - spelsimulatie - agro-industriële ketens - institutionele economie - management - game theory - supply chain management - networks - gaming simulation - agro-industrial chains - institutional economics
    This book studies the organisation of transactions in supply networks. More specifically it investigates the influence of social structure on the mode of organisation in supply networks. To gain new insights, the results in this book have been gathered using gaming simulation as a research method. As this is a new application of gaming simulation, special attention is paid to the methodological implications.
    Food supply chains and networks span a whole series of firms from grower to consumer. Depending on the product traded and the market in which it is consumed the grower and consumer can be located in countries thousands of kilometres apart. However, the food still needs to arrive in a perfect condition at the consumer, passing through several companies in the supply network. Transactions need to be made between the subsequent companies that trade the product. The way in which the transactions are organised can be any mix of three modes of organisation, namely market, network and hierarchy. This book concentrates on market and network. The market mechanism uses the price as a control mechanism. Network uses trust and reputation for this.
    Transactions are made by people. People who trade with each other may have known one another for a long time. Their companies may have business ties. And the traders will have certain norms and values about what is appropriate behaviour in trade. The interpersonal relations, business ties and norms and values influence trade behaviour in a supply network. This behaviour will influence the mode of organisation of the network. Lazzarini et al (2001) call this social structure, as a bucket category of variables from the social sciences that explain interpersonal and business relations and the norms and values of the supply network as a whole. Trust between traders is the most prominent interpersonal variable. Business relations are expressed in a level of embeddedness as a measure of the density and the strength of ties between businesses. Norms and values in a network can be related to the culture traders come from. Social structure covers a broad range of concepts from sociology to social psychology and network theory. This book focuses on the major variables trust and embeddedness, with norms and values as an important context.
    Gaming simulation is commonly used as a training or learning tool. This book, however, uses gaming simulation as a research method. The methodological contribution of this book is to use gaming simulation as a lab environment to generate and test hypotheses using both qualitative and quantitative data in the domain of supply chains and networks. Chapter 2 discusses the methodological issues of gaming simulation as a research method. The first section (2.1) describes what gaming simulation is and gives 6 inputs for a session with a gaming simulation. Section 2.2 argues that by using gaming simulation, researchers can study the behaviour of real people playing a role of interest for research in a simulated environment, based upon the characteristics of gaming simulation. Research purposes are less common among gamers. Section 2.3 first describes the non-research purposes, while Section 2.4 discusses the purposes for research. Three types of research purpose are distinguished, namely hypothesis generation, hypothesis testing and sensitivity analysis when combined with multi-agent simulation. Research with gaming simulation is often positioned in the design sciences, which means that the effect of the gaming simulation as a design on changes in the real world is tested. This book positions gaming simulation in the analytical sciences, to study phenomena in the real world.
    Section 2.5 positions gaming simulation among other research methods common in the domain of supply chains and networks. The influence of social structure on the organisation of transactions can be studied in a single or small set of supply networks using case studies, to provide in-depth observations of actions and the surrounding context. The generalisability of detailed case studies is a complicated matter. Furthermore, it is hard to observe the actual actions in a case study research. Questionnaire research overcomes the generalisability issue of case studies, though lacks the in-depth knowledge of a subject within its contextual variables. Surveys do not observe actual actions either.
    The validity and reliability of gaming simulation is discussed in Section 2.6 and is based on the work of Raser (1969) who identified four criteria for validity: psychological reality, process, structural and predictive validity. Each of the four criteria has been used in this book.
    Chapter 3 presents the research method used in this study. It consists of four interconnected cycles. The first is the design cycle in which the gaming simulation is developed and tested. The test sessions provide insight into the structure and important variables of the problem studied. The hypothesis generation function can be done using the design cycle. The outcomes of the design cycle are induced hypotheses (based upon the test sessions) and the gaming simulation. Both are inputs for the empirical cycle in which a structured experimental set-up results in game sessions, which provide the data to be analysed.
    The other two cycles are support cycles. The first is the multi-agent design cycle in which a multi-agent version of the gaming simulation is built. The second one is the multi-agent simulation cycle in which experiments can be conducted to verify the multi-agent model or to draw conclusions. Multi-agent simulation could in the future provide ways to select interesting variable settings to play with human participants. The multi-agent simulation is validated against conclusions from the empirical cycle.
    Chapter 4 discusses the reference theories on which this book is based. Section 4.1 presents theories on supply chains and networks needed for the domain of study. Section 4.2 discusses new institutional economics used as the main theoretical framework for analysis of the results of the two gaming simulations. Central elements are the four-level framework by Williamson (2000) that links levels of analysis from culture to day-to-day operations, and the modes of organisation, namely network, market and hierarchy. Section 4.3 discusses the fact that there are other explanatory theories used for the two specific gaming simulations. These theories are discussed in the subsequent chapters.
    Two custom-built gaming simulations each study an aspect of the influence of social structure on the mode of organisation of transactions. Chapter 5 presents the first one, called the Trust and Tracing Game (TTG). The TTG assessed the influence of trust and embeddedness on the choice between the network and the market mode of organisation. The TTG is a paper-based gaming simulation of a supply network of a product with a hidden quality attribute. Participants face the dilemma of whether to rely on trust or tracing when confronted with a possible cheat. Section 5.1 describes the fact that the TTG was originally designed to be a learning tool by the researchers who started this project. The TTG operationalised an abstract supply network of a good with a hidden quality attribute. Hypotheses were generated during the last series of test sessions in the design cycle. From observations of 15 test sessions, intended to identify the learning effect, conclusions about the participants’ behaviour in the sessions were drawn. The results showed that participants used the two modes of organisation, both the network and the market mechanism.
    Section 5.2 uses the observations and variables identified in 5.1 as inputs to the empirical cycle for the quantitative analysis of 27 additional sessions as induced hypotheses and list of variables to be collected. The quantitative analysis proved that the mode of organisation in the Trust and Tracing Game was network for the financially well-performing traders and market for the well-performing consumers. Social structure manifested itself in trust and embeddedness influencing the organisation of transactions. Generally trust and embeddedness were detrimental to the (financial) performance in the setting of the Trust and Tracing Game, as the traders who benefitted from the use of network exploited their trusting clients. There was no evidence that trust affected the measurable transaction costs. Additional analyses showed that buyers detected cheats with other mechanisms than tracing. The traces showed more cheats than statistically possible when the envelopes were a random sample.
    Section 5.3 presents the multi-agent model developed for the Trust and Tracing Game. This model has been tested and validated. It has been possible to validate the multi-agent simulation on an aggregate level against sessions with human participants. Hypotheses were formulated based upon observations of sessions. Each hypothesis could be confirmed in model runs.
    Chapter 6 presents research with the second gaming simulation, called the Mango Chain Game (MCG). It was developed to study the bargaining power and revenue distribution among traders in the Costa Rican mango export chain. The MCG assessed what factors, including social structure, determined the bargaining power, what mode of organisation was used and how this influenced the revenue distribution between traders. The data collection combined data from a questionnaire among the participants with the actual behaviour in the game session. Five sessions were conducted with smallholders in the Costa Rica lowlands, resulting in 82 contracts. The results show that the bargaining power in the sessions was isomorphic to the real-world bargaining power of smallholders, multinationals and independent exporters. As expected, lower bargaining power on the part of the buyer (seller) resulted in higher revenue for the seller (buyer). In general, stakeholders with more bargaining power were able to take advantage of the other agents. Higher risk-aversion of the buyers and/or the sellers led to higher revenues for the other agents involved in the exchange relationship. In the same vein, long-term contracts in the buyer-seller relationship led to lower revenues (but also reduced risk) for sellers. The latter result was surprising, since contract choice appeared only to be significant for the seller’s and not for the buyer’s revenue equation. Mango producers turned out to be well aware of the fact that the type of markets in which they operate is mainly based on short-terms contracts. Not working with long-term contracts gave them the opportunity to remain flexible towards changes in demand and supply that they cannot control. Producers were trying to establish long-term relationships, but they could equally rely on repeat short-term contracts with the same partner. The latter type of contract tends to rely on trust or friendship, thus the network mode of organisation is at play here. Finally, real-world wealth appeared to have a significant impact on bargaining power.
    Chapter 7 discusses the experiences with gaming simulation as a research method and draws conclusions from the combined results of the TTG and MCG. Section 7.1 discusses the experiences with gaming simulation to generate and test hypotheses. Methodologically there were some differences. Research with the TTG took more time than that with the MCG. The reasons for this difference can be found in the functions used and the number of variables. The TTG started with a broad scope, where the important variables coming from all four levels of the Williamson framework had yet to be found in the design cycle. In contrast to this, the MCG used an analytical model with fewer and theory-based variables. Attention is paid to validity and reliability. In summary, the process validity of both gaming simulations was the most important aspect, and psychological reality was required to get the process going. Both the TTG and MCG met these criteria in different ways. The MCG scored more positively on both the structural and predictive validity because of the closer resemblance of the supply network modelled with the real world and the use of real smallholders versus students. Care should be taken regarding claims about what is modelled.
    The multi-agent simulation has been developed to perform sensitivity analyses of variable settings (loads). This project has not reached the point where variable settings selected with the MAS have been tested in a human session. Future research should make clear whether MAS really helps to increase efficiency by reducing the number of sessions needed through selection of interesting loads. This project has proven, however, that it is possible to develop and validate a multi-agent model of a gaming simulation.
    The different types of data that the TTG and MCG can generate are hard to obtain using other methods. Gaming simulation is special in that the participants are exposed to a laboratory-like situation that isolates them from the real-world (trading) environment. In this laboratory environment, the attention of the participants can be focused on a particular problem, while retaining the full richness of human behaviour. Based upon the experiences presented in this book, gaming simulation can be positioned as a research method that facilitates a whole range of data collections. It is possible to acquire data before, during and after a session, enabling the coupling with questionnaires and interviews and actual observation of actions. It can analyse differences between participants in one session, testing for differences in backgrounds, or between session, testing for the effects of varying the load and situation in a session, or even the rules, roles, objectives and constraints of the gaming simulation itself. The combination of qualitative and quantitative analyses that is possible using gaming simulations makes the method a good candidate for research that requires both. In the methodology used in the MCG and TTG the first cycle (design cycle) was based upon a qualitative approach, while the hypotheses were tested in a quantitative empirical cycle.
    Section 7.2 compares the theoretical conclusions of the Trust and Tracing Game with those of the Mango Chain Game and relates them to the main research question. The conclusions of the MCG are in line with the TTG conclusions insofar as the variables of social structure used in this book (trust, embeddedness, norms and values) clearly shape the organisation of the transactions. Both the TTG and MCG show that trust and embeddedness lead to the use of the network mode of organisation, but also to less revenue in the setting of these two gaming simulations. It seems that the network mechanism is essential in supply networks with independent traders but not in a way that directly leads to more revenues. The conclusions from the two gaming simulations are at odds with the leading paradigm in the literature on supply networks which says that trust and relationships are important for successful business. The conclusions are more in line with neo-classical economic theory, where companies use transactions as the rational result of considering price and product.
    Section 7.3 presents ideas for future research divided into ideas for the domain and ideas for methodological improvements. Next, Section 7.4 presents the implications of the research for the domain of food supply chains and networks. The application of gaming simulation as (one of the) research method(s) can be of value for gathering data about the real behaviour of real participants in a simplified ‘surrogate’ environment, determined by the gaming simulation. In this book a laboratory for chain and network studies has been built. Section 7.5 looks at the implications for other domains and argues that the issues about trust, embeddedness and other variables from social structure can be found in most other business domains, thus providing opportunities for research with this method.
    The chapter ends with some concluding remarks in Section 7.6, stating that this book showed as a proof-of-principle that gaming simulation is an excellent additional research method for controlled analysis of complex social systems. It also showed that the possibility to have a repeatable experiment within a controlled contextual setting provides insight into socio-economic behaviour in a way that can be approached from multiple bodies of theory. Staying within the framework of one body of theory cannot explain the full richness of human behaviour, thus links have to be made. In the current book the theoretical framework from new institutional economics has been used and some first attempts have been made to link up with theory on culture, psychology and other theories in the social sciences. Future research could use gaming simulation as the research method of choice for true interdisciplinary research.

    Nederlandse samenvatting
    Dit boek bestudeert de organisatie van transacties, en in het bijzonder de invloed van ‘social structure’ op keuze van het organisatiemechanisme in een handelsnetwerk. De resultaten in dit boek zijn verkregen met behulp van spelsimulatie als onderzoeksmethode. Dit is een nieuwe toepassing van spelsimulatie en daarom besteedt dit boek bijzondere aandacht aan de methodologische aspecten.
    Handelsnetwerken in voedingswaren bestrijken een hele rij van bedrijven tussen de boer en de consument. De boer en de consument kunnen duizenden kilometers van elkaar verwijderd zijn, afhankelijk van het soort product en de markt waarin het wordt geconsumeerd. Hoe ver ook, het voedsel moet in perfecte conditie bij de klant aankomen, terwijl het door de handen van vele bedrijven gaat. Deze bedrijven moeten met elkaar transacties sluiten. De manier waarop deze transacties worden georganiseerd is een mix van drie organisatiemechanismen, te weten markt, netwerk en hiërarchie. Dit book concentreert zich op het markt- en het netwerkmechanisme. Het marktmechanisme gebruikt de prijs als als sturingselement terwijl het netwerkmechanisme vertrouwen en reputatie gebruikt.
    Mensen maken transacties. Mensen die handel met elkaar drijven kunnen elkaar soms al heel lang kennen. Hun bedrijven kunnen banden hebben, en de handelaren zullen bepaalde normen en waarden hebben over wat fatsoenlijk gedrag is in handel. De persoonlijke relaties, zakelijke banden en de normen en waarden beïnvloeden het handelsgedrag in een handelsketen. Dit gedrag heeft invloed op de mix van organisatiemechanismen. Lazzarini et al (2001) noemen dit de sociale structuur, wat een verzamel-categorie is voor allerlei variabelen uit de sociale wetenschappen over persoonlijke relaties, zakelijke banden en de normen en waarden van het gehele handelsnetwerk. Vertrouwen tussen handelspartners is de belangrijkste persoonlijke variabele. Zakelijke banden worden uitgedrukt in een niveau van ‘embeddedness’, een begrip wat betekent in hoeverre een bedrijf banden heeft en hoe sterk die banden zijn. De normen en waarden in een handelsnetwerk kunnen gerelateerd zijn aan de cultuur waar de handelaren vandaan komen. Sociale structuur bestrijkt een heel scala van concepten komend van onder andere van sociale psychologie en netwerk theorie. Dit boek concentreert zich op de belangrijkste variabelen vertrouwen, embeddedness, waarbij normen en waarden een belangrijke context vormen.
    Spelsimulatie is een bekende methode om te trainen. In dit boek wordt spelsimulatie echter gebruikt als onderzoeksmethode. De methodologische bijdrage ligt in het gebruik van spelsimulatie als een laboratoriumomgeving om hypotheses te genereren en te testen met zowel kwalitatieve als kwantitatieve data in het domein van handelsnetwerken. Hoofdstuk 2 behandelt de methodologische implicaties van spelsimulatie als onderzoeksmethode. Sectie 2.1 beschrijft wat spelsimulatie is en geeft 6 ingrediënten voor een spelsessie. Sectie 2.2 beargumenteert dat onderzoekers het gedrag van echte mensen die een rol spelen in een gesimuleerde omgeving kunnen bestuderen met spelsimulatie. Een minderheid van de gebruikers van spelsimulatie gebruikt de methode voor onderzoek. Sectie 2.3 behandelt het nut van spelsimulatie voor niet-onderzoeksdoeleinden, waarna Sectie 2.4 het nut voor onderzoeksdoeleinden bediscussieerd. Drie soorten functies worden hierin onderscheiden, te weten het genereren van hypotheses, het testen van hypotheses en gevoeligheidsanalyse in combinatie met een multi agent simulatie. Onderzoek met behulp van spelsimulatie wordt vaak gepositioneerd in de ontwerpwetenschappen, wat inhoudt dat het effect van het ontwerp (de spelsimulatie) op de echte wereld wordt getest. In dit boek wordt spelsimulatie in de analytische wetenschappen geplaatst, die fenomenen in de echte wereld bestuderen.
    Sectie 2.5 bespreekt de positie van spelsimulatie ten opzichte van meer gebruikelijke onderzoeksmethoden in het domein van handelsnetwerken. De invloed van sociale structuur op de mix can organisatiemechanismen kan worden bestudeerd door 1 of enkele handelsnetwerken te bestuderen in een casus studie om diepgaande observaties van handelingen en de context te verkrijgen. De generaliseerbaarheid van gedetailleerde casus studies is een gecompliceerde zaak. Ook is het moeilijk om echte handelingen te observeren in een casus studie, omdat meestal alleen de vastlegging van de handeling te volgen is. Vragenlijsten hebben geen problemen met generaliseerbaarheid maar missen de gedetailleerde kennis over een onderwerp van studie in zijn context. Vragenlijsten observeren ook geen handelingen.
    De validiteit en betrouwbaarheid van spelsimulatie wordt in Sectie 2.6 behandeld, gebaseerd op het werk van Raser (1969) die vier criteria voor validiteit identificeerde, namelijk psychologische realiteit, proces-, structuur- en voorspellende validiteit. Ieder van deze criteria wordt in dit boek gebruikt.
    Hoofdstuk 3 presenteert de onderzoeksmethode zoals gebruikt in deze studie. Het bestaat uit vier cycli die onderling zijn verbonden. De eerste cyclus is de ontwerp cyclus waarin de spelsimulatie wordt ontwikkeld en getest. De test sessies geven inzicht in de structuur en belangrijke variabelen van het onderzoeksprobleem. De hypothese genererende functie kan in de ontwerpcyclus worden gedaan. De uitkomsten van de ontwerpcyclus zijn geïnduceerde hypothesen (gebaseerd op de test sessies) en de ontworpen spelsimulatie. Beide zijn ingrediënten voor de empirische cyclus waarin een gestructureerde experimentele configuratie resulteert in spelsessies die weer de data opleveren voor de analyse.
    De andere twee cycli zijn ondersteunend. De eerste is de multi-agent ontwerpcyclus waarin een multi-agent versie van de spelsimulatie wordt ontworpen. De tweede is de multi-agent simulatie cyclus waarin experimenten worden gedaan om het multi-agent model te valideren of om conclusies te kunnen trekken. Multi-agent simulaties kunnen in de toekomst manieren verschaffen om interesante configuraties van variabelen te selecteren die daarna met echte mensen worden gespeeld in spelsessies. De multi-agent simulatie is gevalideerd tegen conclusies uit de empirische cyclus.
    Hoofdstuk 4 bediscussieert de referentie-theorieën waarop dit boek is gebaseerd. Sectie 4.1 presenteert theorieën over handelsketens en handelsnetwerken vanwege het domein van studie. Sectie 4.2 behandelt nieuwe institutionele economie wat hier gebruikt wordt als belangrijkste theoretische raamwerk voor de analyse van de resultaten van de twee spelsimulaties. Centrale elementen zijn het vier-lagen model van Williamson (2000) dat de niveaus van analyse van cultuur tot en met dagelijkse operaties aan elkaar verbindt, en de organisatiemechanismen netwerk, markt en hiërarchie. Sectie 4.3 verklaart dat er zijn meer verklarende theorieën in gebruik zijn voor de twee spelsimulaties. Deze theorieën worden behandeld in de successievelijke hoofdstukken.
    Twee spelsimulaties bestuderen ieder een aspect van de invloed van sociale structuur op de mix van organisatiemechanismen. Hoofdstuk 5 presenteert de eerste, genaamd Trust and Tracing Game (TTG). De TTG bestudeert de invloed van vertrouwen en embeddedness op de keuze tussen het markt- en het netwerk-organisatiemechanisme. De TTG is een papieren spelsimulatie van een handelsketen in een product met een verborgen kwaliteitskenmerk. Deelnemers worden geconfronteerd met het dilemma of ze moeten uitgaan van vertrouwen of moeten tracen wanneer ze mogelijk bedrog signaleren. Sectie 5.1 beschrijft dat de TTG oorspronkelijk was ontworpen als leermiddel door de onderzoekers die dit project zijn gestart. Vanuit observaties van 15 testsessies, bedoeld om de leereffecten te bepalen, konden conclusies worden getrokken over het gedrag van de deelnemers in de spelsessies. De resultaten laten zien dat de deelnemers zowel het netwerk- als het markt-organisatiemechanisme gebruikten.
    Sectie 5.2 gebruikt de observaties en belangrijke variabelen uit Sectie 5.1 als ingrediënten voor de empirische cyclus voor de kwantitatieve analyse van 27 additionele sessies als geïnduceerde hypothesen en lijst van variabelen om te verzamelen. De kwantitatieve analyse bewees dat het netwerk-organisatiemechanisme werd gebruikt door financieel goed presterende handelaren en dat goed presterende consumenten het marktmechanisme gebruikten. Sociale structuur kwam naar voren door de invloed van vertrouwen en embeddedness op het gebruik van de organisatiemechanismen. Over het algemeen waren vertrouwen en embeddedness slecht voor de financiële resultaten binnen de omstandigheden van de TTG, omdat handelaren die profiteerden van het netwerkmechanisme hun goed-vertrouwende klanten exploiteerden. Een effect van vertrouwen op de (meetbare) transactiekosten werd niet gevonden. Aanvullende analyses lieten zien dat er andere manieren dan tracing moeten zijn waardoor bedrog wordt gedetecteerd. De keren dat er getraced werd vonden namelijk vaker een bedrog dan statistisch gezien mogelijk was.
    Sectie 5.3 presenteert het multi-agent model dat is ontworpen voor de TTG/ Dit model is getest en gevalideerd. Het is mogelijk gebleken om het multi-agent model te valideren op geaggregeerd niveau tegen sessies met menselijke deelnemers. Op basis van observaties zijn hypotheses geformuleerd die stuk voor stuk konden worden bevestigd in model-ronden.
    Hoofdstuk 6 presenteert onderzoek met de tweede spelsimulatie genaamd de Mango Chain Game (MCG). Dit spel is ontwikkeld om de onderhandelingsmacht en verdeling van opbrengsten tussen handelaren in het Costaricaanse mango exportnetwerk te bestuderen. De MCG bekeek welke factoren, waaronder sociale structuur, de onderhandelingsmacht bepaalden, welk organisatiemechanisme gebruikt werd en hoe dit de verdeling van de opbrengsten tussen handelaren beïnvloedde. De dataverzameling combineerde gegevens uit een vragenlijst met het gedrag in de sessies. Vijf sessies zijn georganiseerd met mangoboeren in de Costaricaanse laaglanden, resulterend in 82 contracten. De resultaten laten zien dat onderhandelingsmacht in de spelsessies gelijkvormig was met die in de echte wereld. Zoals verwacht resulteerde een lagere onderhandelingsmacht van de koper in hogere opbrengsten voor de verkoper en vice versa. Over het algemeen waren deelnemers met meer onderhandelingsmacht in staat om voordeel te behalen uit andere deelnemers. Een hogere weerstand tegen risico van een koper of verkoper leidde tot meer opbrengsten voor de handelspartner. Parallel hieraan gaven lange-termijn contracten minder opbrengsten (maar ook minder risico) voor de verkopers. Dit laatste resultaat was opvallend omdat de lengte van het contract alleen significant was voor de verkopers en niet voor de kopers. Mangoboeren bleken zich goed bewust van het feit dat hun markt wordt gedomineerd door korte-termijn contracten. Het vermijden van lange-termijn contracten gaf hen de mogelijkheid om flexibel te blijven voor veranderingen in vraag en aanbod die zij niet kunnen controleren. Producenten probeerden wel lange-termijn contracten te maken maar konden in het spel net zo goed herhaalde korte-termijn contracten maken met dezelfde handelspartner. Dit soort terugkerende contracten blijkt gebaseerd op vertrouwen en vriendschap en dus het netwerk-organisatiemechanisme. Als laatste bleek welvaart in de echte wereld een significante invloed te hebben op onderhandelingsmacht.
    Hoofdstuk 7 bespreekt de ervaringen met spelsimulatie als onderzoeksmethode en trekt conclusies uit de gecombineerde resultaten van de TTG en MCG. Sectie 7.1 bediscussieerd de ervaringen met spelsimulatie in het genereren en testen van hypotheses. Methodologisch zijn er verschillen tussen de TTG en MCG. De TTG vroeg veel meer tijd zowel voor de ontwerpcyclus als de empirische cyclus. De reden hiervoor is het gebruik van de hypothese genererende functie en het grotere aantal variabelen om te testen. De TTG startte met een brede blik op het probleem, waarbij de belangrijke variabelen van alle 4 de niveaus van het theoretisch raamwerk van Williamson (2000) nog gevonden moesten worden in de hypothese genererende fase. De MCG daarentegen gebruikte een analytisch model met minder, en op theorie gebaseerde variabelen. De sectie besteedt aandacht aan validiteit en betrouwbaarheid. Samenvattend blijkt dat de proces-validiteit het meest belangrijk was, en om het proces op gang te krijgen was psychologische realiteit noodzakelijk. De TTG en MCG zijn hierin beide geslaagd, maar via verschillende wegen. De MCG scoort ook positief op de structuur- en voorspellende validiteit door de nauwere benadering van de realiteit in hetgeen is gemodelleerd en het gebruik van echte mangoboeren in plaats van studenten. Speciale aandacht verdient de stelling over wat is gemodelleerd in de spelsimulatie.
    De multi-agent simulatie is ontwikkeld om gevoeligheidsanalyse te kunnen doen van configuraties van variabelen. Dit project is niet zover gekomen dat configuraties van variabelen direct uit de multi-agent simulatie konden worden getest in spelsessies. Nader onderzoek moet duidelijk maken of een multi-agent simulatie echt helpt om het aantal sessies dat nodig is om interessante configuraties te vinden te reduceren. Dit project heeft echter laten zien dat het mogelijk is om een multi-agent model te maken en te valideren van een spelsimulatie.
    De verschillende typen data die de TTG en MCG kunnen genereren zijn moeilijk te verkrijgen met andere methoden. Spelsimulatie is speciaal omdat de deelnemers worden blootgesteld aan een laboratorium-achtige situatie die hen isoleert van de echte (handels)wereld. Binnen dit laboratorium kan de aandacht van de deelnemers worden toegespitst op een specifiek probleem terwijl de volle rijkheid van menselijk gedrag wordt behouden. Gebaseerd op de ervaringen gepresenteerd in dit boek kan spelsimulatie worden gepositioneerd als een onderzoeksmethode die een hele range aan data verzamelingen kan faciliteren. Het is mogelijk om data te verzamelen voor, tijdens en na een sessie, met een combinatie van vragenlijsten, interviews en observaties van handelingen. Het kan verschillen tussen mensen in een sessie analyseren, of tussen sessies de effecten van varieren met de configuratie van variabelen en de situering of zelfs met de regels, rollen, doelen en beperkingen. De combinatie van kwantitatieve en kwalitatieve analyse die mogelijk zijn met spelsimulatie maken de methode een goede kandidaat voor onderzoek waarin beide gecombineerd moeten worden. De ontwerpcyclus van de MCG en TTG waren gebaseerd op kwalitatieve analyse terwijl de emprische cyclus van beide was gebaseerd op kwantitatief werk.
    Sectie 7.2 vergelijkt de theoretische conclusies van de TTG met die van de MCG en zoekt de relatie met de onderzoeksvraag. De conclusies van de MCG zijn in lijn met die van de TTG in zoverre dat de variabelen van sociale structuur zoals gebruikt in dit boek (vertrouwen, embeddedness en normen en waarden) duidelijk de mix van organisatiemechanismen beïnvloeden. Zowel de TTG als de MCG laten zien dat vertrouwen en embeddedness leiden tot het gebruik van het netwerk-organisatiemechanisme, maar ook tot lagere inkomsten binnen de omgeving van de spelsessies. Het lijkt erop dat het netwerk-organisatiemechanisme essentieel is in handelsnetwerken met onafhankelijke bedrijven, maar niet op een manier die rechtstreeks leid tot meer inkomsten. De conclusies van de twee spelsimulaties zijn in tegenspraak met de heersende opvatting in de literatuur over handelsnetwerken dat vertrouwen en relaties van belang zijn voor een succesvol bedrijf. De conclusies lijken meer op klassieke economische theorie, waarin bedrijven transacties zien als het rationele resultaat van prijs en product.
    Sectie 7.3 presenteert enkele ideeën voor nader onderzoek, onderverdeeld in ideeën voor het domein en voor methodologische verbeteringen. Sectie 7.4 bespreekt implicaties van dit onderzoek voor het domein van voedselhandelsketen en –netwerken. De toepassing van spelsimulatie als (een van de ) onderzoeksmethode(n) kan van waarde zijn door het verzamelen van data over echt gedrag van echte deelnemers in een gesimplificeerde ‘surrogaat’-omgeving, bepaald door de spelsimulatie. Dit boek laat zien dat er een laboratorium voor keten- en netwerkstudies is gebouwd. Sectie 7.5 geeft implicaties van dit onderzoek voor andere domeinen en beargumenteert dat de onderwerpen omtrent vertrouwen, embeddedness en andere variabelen van sociale structuur ook in de meeste andere (handels)domeinen aanwezig zijn, waarmee nieuwe mogelijkheden voor het gebruik van spelsimulatie kunnen worden gevonden.
    Hoofdstuk 7 eindigt met enkele concluderende opmerkingen in Sectie 7.6, waarin gezegd wordt dat dit book met een voorbeeld heeft laten zien dat spelsimulatie een goede methode is voor gecontroleerde analyse van complexe sociale systemen. Het heeft ook laten zien dat de de mogelijkheden van een herhaalbaar experiment in een gecontroleerde contextuele setting inzicht geeft in sociaal economisch gedrag op een manier die met verschillende theorieën benaderd kan worden. Binnen een theoretisch kader blijven kan de volledige rijkheid van menselijk gedrag niet verklaren, en dus zijn verbindingen tussen theorieën noodzakelijk. In dit boek is het theoretisch raamwerk van nieuwe institutionele economie gebruikt en zijn eerste pogingen gedaan voor verbindingen met cultuurtheorie, psychologie en andere theorieën uit de sociale wetenschappen. Toekomstig onderzoek zou spelsimulatie kunnen gebruiken als methode voor echt interdisciplinair onderzoek.

    Understanding institutional arrangements: Fresh Fruit and Vegetable value chains in East Africa
    Eaton, D.J.F. ; Meijerink, G.W. ; Bijman, J. - \ 2008
    Wageningen : Wageningen International (Markets, chains and sustainable development [11]) - ISBN 9789085852285 - 79
    economische ontwikkeling - kettingen - fruitteelt - groenteteelt - oost-afrika - landbouwsector - ketenmanagement - institutionele economie - economic development - chains - fruit growing - vegetable growing - east africa - agricultural sector - supply chain management - institutional economics
    Institutional economics and economic organisation theory : an integrated approach
    Slangen, L.H.G. ; Loucks, L. ; Slangen, A.H.L. - \ 2008
    Wageningen : Wageningen Academic Publishers - ISBN 9789086860777 - 431
    instellingen - economie - neo-klassieke economie - economische theorie - studieboeken - institutionele economie - economische organisatietheorie - institutions - economics - neoclassical economics - economic theory - textbooks - institutional economics - economic organization theory
    This publication presents one of the first attempts to integrate two emerging bodies of economic research: institutional economics and organizational theory. It begins within the framework of neoclassical economics, and then extends the boundaries of this framework to offer answers to questions that have so far remained puzzles in neoclassical economics. The integrated approach of this publication also challenges the dominant paradigm in economics over the last 15 years that views the market as the best mechanism for carrying out transactions. The market is not the only transaction mechanism; other modes of organization are also important. However, this way of thinking does not involve a simple reintroduction of the confrontation between the 'government' and the 'market'. On the contrary, the integrated approach tries to open the 'black box' of the role of institutions in daily life and the diversity of modes of organization. Through this integrated approach, the book hopes to contribute to a better insight to real world problems.
    Markets, institutional change and the new agenda for agriculture
    Eaton, D.J.F. ; Meijerink, G.W. - \ 2007
    Wageningen : Stichting DLO (Markets, chains and sustainable development 6) - ISBN 9789085851530 - 25
    economische ontwikkeling - markten - landbouw - institutionele economie - economische verandering - duurzame ontwikkeling - economic development - markets - agriculture - institutional economics - economic change - sustainable development
    Governing urban water flows in China
    Zhong, L. - \ 2007
    Wageningen University. Promotor(en): Arthur Mol. - [S.l.] : S.n. - ISBN 9789085048312 - 195
    waterbeheer - instellingen - china - innovaties - transformatie - bestuur - natuurlijke hulpbronnen - stedelijke gebieden - besluitvorming - institutionele economie - governance - water management - institutions - china - innovations - transformation - administration - natural resources - urban areas - decision making - institutional economics - governance
    China has been witnessing an unprecedented period of continuous high economic growth during the past three decades. But this has been paralleled by severe environmental challenges, of which water problems are of key importance. This thesis addresses the urban water challenges of contemporary China, by focusing especially on the institutional traditions and innovations in Chinese water policies and governance, basically for two additional reasons. First, the large majority of studies regarding China’s urban water sector have focused on technological innovations and – to a lesser extent – the economic costs, leaving institutional dimensions often unaddressed. This thesis is one of the first to look more systematically into several institutional innovations that take place in contemporary urban water governance around China. Second, China’s water problems are closely linked to many societal questions and debates that characterise current transitional China, such as the equal distribution of costs and benefits in a market economy, democracy and participation, effective governance and the relation between state and market. Our institutional analyses aim to focus exactly on the linkage between water challenges and these other main developments. Inspired by a series of theoretical considerations in environmental sociology, this thesis, on the one hand, develops an Ecological Modernization-based theoretical framework for studying institutional transformations of China’s urban water sector. As such, it interprets the current institutional innovations as a (potential) trend of ecological modernization in China. On the other hand, this thesis provides implications for the development of a more China-specified Ecological Modernization theory. And as such it contributes to the reframing of Ecological Modernization theory to make it relevant beyond western Europe. Traditionally, the Chinese state had a monopoly in managing and arranging the urban water sector, both in terms of water supply and waste water treatment. Along with the Chinese economic reforms since the 1980s and its movement from a centrally planned economy towards a market-based economy, this state monopoly is changing dramatically. This change can be labelled the modernization of urban water governance. Using an Ecological Modernization perspective, this thesis investigates three major environmental-induced institutional innovations of Chinese urban water sector, thereby focusing on the changing roles of and relations between the state, economic actors and civil society. First, China has gradually increased attention to, research on and experiments with the application of economic instruments, as well as the involvement of the private sector, in urban water management. Although we seem to be at only an early stage of both innovations, which prevents us from drawing any final conclusion regarding their impacts on the Chinese water sector, it has become clear that the traditional full governmental provision of water services has changed dramatically in China. Economic and market dynamics are increasingly playing important roles; prices of water and waste water treatment have increased dramatically, subsidies are more and more abandoned (with some exceptions for vulnerable groups and crucial state functions), and economic actors appear on the stage of policy implementation and sometimes even policy formulation. While in principle many of these innovations seem to contribute to more efficient and effective urban water provision, much room for improvement remains, also because of the current lack of attention to institutional design by the Chinese authorities. Second, the Chinese state is redefining the state-market relations within the urban water sector in order to deal with – among others - the environmental dimensions of water services (such as natural resource protection, efficient infrastructure, and pollution control). Not only the liberalization and commercialization of conventional governmental water utilities but also the emergence and spread of private sector involvement in water service provision contribute to new roles and responsibilities of state and market actors, and to new modes of urban water governance. Various models of public-private partnerships are being tried and implemented across China, where a (potential) market is being formulated for capital raising and financing, constructing infrastructure and facilities, and executing service provisions. This comes along with debates and struggle over tasks and responsibilities left for the state, both at the national and the local level. And with that also more fundamental debates on the nature of water, ranging between a public good and a private good. Thirdly, the new institutional arrangement of public hearings for setting water tariffs provides evidence that civil society starts to become involved in governmental decision-making processes, although this new institution has a different outlook and performance from public hearings developed in Western countries. Our investigations into price public hearings in various Chinese cities witness that the Chinese government seems to be moving towards to a trend of more open, transparent and accountable governance, although the impact of these public hearings is still controversial and differs from city to city. Issues of democracy and equity are constantly debated and defined in the practical operationalization of these institutional arrangements. Price public hearings do not stand on its own. This tendency of further civil society involvement can also be found in other developments, such as the increasing room for maneuver for NGOs (e.g. with respect to major water issues such as dams) and innovations in the new Environmental Impact Assessment law. In sum, this thesis on the one side has provided evidences that contemporary China is witnessing at least experiments with a modernization of water governance that can be understood in terms of ecological modernization. For instance, decentralization, the involvement of various non-state actors, further reform of state-market relations, increasing use of economic and market dynamics, and a wider contribution of civil society and public participation are typical developments that reflect an ecological modernization agenda and theory. On the other side, this thesis shows differences between what can be labeled a Western style Ecological Modernization framework and the actual practice of urban water governance reform in China, due to the different economic, political and societal variables in China. This implies the need for specifying where Western style ecological modernization practices differ from what we can expect in state-in-transition, and arguable also the need for a Chinese style Ecological Modernization theory. This thesis does not attempt to formulate such a theory, but does provide some of the ingredients and building stones for that.
    Property rights after market liberalization reforms: land titling and investments in rural Peru
    Fort Meyer, R.A. - \ 2007
    Wageningen University. Promotor(en): Arie Kuyvenhoven; Ruerd Ruben, co-promotor(en): J. Escobar. - [S.l.] : S.n. - ISBN 9789085048305 - 125
    eigendomsrechten - markten - toegang - toegangsrecht - grondeigendom - registratie - grondbeleid - instellingen - financiële instellingen - kleine landbouwbedrijven - krediet - peru - ontwikkelingseconomie - liberalisatie - institutionele economie - property rights - markets - access - right of access - land ownership - registration - land policy - institutions - financial institutions - small farms - credit - peru - development economics - liberalization - institutional economics
    This study discusses the links between land access, property rights, and economic development, analyzing the results and limitations of a public intervention- Land Titling and Registration- that constitutes one of the main instruments for contemporary land policy in Peru. It starts with a global perspective, and then develops a meso (or regional) and micro level approach for the study of the Peruvian Land Tilting and Registration Program (PETT). The study attempts to provide a comprehensive analysis and discussion of the importance of institutions, like land property rights, in the context of market liberalization reforms. In operational terms, this means verifying whether land titling constitutes a necessary and/or sufficient condition to promote investments and increase land values. To accomplish this objective, we use information at two different levels. We assembled a country-level panel dataset for the macro perspective, and rely on household’s surveys collected during the year 2004 as part of the evaluation of the PETT Program for the micro approach of this study. Our findings reveal that titling and registration can be considered as a necessary condition to improve investment opportunities when its implementation procedure is based on the recognition of previous informal land rights and community networks, because its effect on the reduction of transaction costs at a regional level improves the dynamics of land markets and facilitates the entrance of formal financial institutions. A decentralized program is more likely to understand and correctly assess local conditions, as well as to concentrate its work on poorer farmers confronting stronger limitations to acquire tenure security by other means. Targeting must be applied also at the regional level, identifying less-developed areas that can benefit from the externality effects provided by increased levels of titling density. However, the presence of other limitations that constrain the participation of small farmers in the formal credit market, and the inability of titling to solve them by itself, makes it difficult to consider this policy as a sufficient condition to improve the livelihood of poorer farmers.
    Institutional economic analysis of vegetable production and marketing in northern Philippines: social capital, institutions and governance
    Milagrosa, A. - \ 2007
    Wageningen University. Promotor(en): Arie Oskam, co-promotor(en): Louis Slangen. - [S.l.] : S.n. - ISBN 9789085045977 - 183
    tuinbouw - groenteteelt - landbouwproductie - marketing - economische analyse - filippijnen - overheidsbeleid - sociaal kapitaal - institutionele economie - horticulture - vegetable growing - agricultural production - marketing - economic analysis - philippines - government policy - social capital - institutional economics
    This study examines vegetable production and marketing among indigenous communities in northernPhilippinesusing an institutional economics approach. It develops a framework that analyses the four levels of institutions; Social Embededdness, Institutional Environment, Governance Structures and Resource Allocation alongside the Structure, Conduct and Performance of the vegetable sector. Using this integrated framework, the thesis engages on a range of topics from the structure of the sector to sales and margins, from trust to favoured-buyer systems and from transaction cost analysis to farmer's decision-making processes. Also, a framework that aligns efficient contract types with governance structures based on observable transaction attributes was developed. The modeling approach that determines how farmers choose trading partners based on farm and farmer characteristics, transaction attributes and social capital was likewise used.

    The first important finding of the study is that a dual structure - in terms of farm-size and total sales - exists in the province. On the one hand, several small farmers own small farm sizes and share a small percentage of total market sales. On the other hand, a few big farmers own big farms and share a big percentage of total market sales. Three governance structures dominate trade; the most common are commissioner-based followed by wholesaler and contractor-based organization. Another important finding of the research is that many farmers turn to wholesalers for loans because of difficulties accessing or complying with formal credit institutions. At harvest time the repayment scheme forces farmers into trading arrangements with wholesalers which in turn, lowers search, negotiation and enforcement costs. This locked-in effect reduces trading alternatives for farmers and lowers total transaction costs. Not surprisingly, wholesaler-based governance structure is the most efficient marketing arrangement from a transaction costs perspective. A third important finding of the thesis is that the social capital of farmers and traders in the province, aggregated from scores on trust, associatedness, common goals and optimism, is low. Current social capital is ineffective in facilitating market information exchange and providing countervailing power to farmers in selling crops. With regards to decision-making, the study showed that farmers with relatively higher social capital select traders differently from farmers with lower social capital. Moreover, ethnicity is a significant factor that influences trust, volunteerism and social networking as well as trading partner selection. This thesis shows that bringing in social elements such as social capital and culture in institutional economic analysis yields richer results in the explanation of behaviour of the market and its participants.
    Agricultural trade policies and development : incorporating institutional and dynamic aspects
    Koning, N.B.J. ; Jongeneel, R.A. ; Ton, G. ; Bindraban, P.S. - \ 2006
    Wageningen : Wageningen UR - 65
    agricultural policy - agricultural trade - development - developing countries - bolivia - kenya - institutional economics - landbouwbeleid - agrarische handel - ontwikkeling - ontwikkelingslanden - institutionele economie
    Preventie en bestrijding van bruinrot en ringrot in de aardappelkolom, institutionele analyse
    Janssens, S.R.M. ; Westerman, A.D. ; Bunte, F.H.J. ; Bremmer, J. - \ 2006
    Den Haag : LEI (Rapport / LEI : Domein 7, Gamma, instituties, mens en beleving ) - ISBN 9789086151165 - 65
    agrarische economie - landbouwbeleid - regering - aardappelen - industrie - gewasbescherming - plagenbestrijding - plantenziekten - akkerbouw - ralstonia solanacearum - nederland - institutionele economie - agricultural economics - agricultural policy - government - potatoes - industry - plant protection - pest control - plant diseases - arable farming - ralstonia solanacearum - netherlands - institutional economics
    Overheid en bedrijfsleven willen inzicht in de manier waarop effectief vorm gegeven kan worden aan de preventie en bestrijding van quarantaineorganismen. Voor de organismen bruin- en ringrot is voor de aardappelkolom een institutionele analyse van het bestaande beleid gemaakt specifiek gericht op de rolverdeling tussen overheid, bedrijfsleven en andere stakeholders. Deze kwalitatieve analyse is opgesteld vanuit het theoretische kader welke vervolgens is gecombineerd met bevindingen uit de praktijk. Het verminderen van het risico op besmetting van bruinrot en ringrot is een publiek goed waarbij aandacht voor aanscherping van bedrijfshygiëne en kostenverdeling wordt voorgesteld. Government and the potato industry want to understand how to prevent and control infectious diseases in plant production. For the organisms brown rot and ring rot, an institutional analysis is made of the actual policy in the potato chain. This qualitative analysis studies the division of roles between government, agricultural industry and other stakeholders, is based on a theoretical framework and later combined with practical findings. Reducing the risk of brown rot and ring rot in potatoes is a public matter. Special attention to hygiene and spread of cost is suggested.
    Agriculture, resource management and institutions : a socioeconomic analysis of households in Tigray, Ethiopia
    Tesfay Belay, Girmay - \ 2006
    Wageningen University. Promotor(en): Arie Kuyvenhoven; Ruerd Ruben, co-promotor(en): J. Pender. - [S.l.] : S.n. - ISBN 9789085045328 - 156
    economische ontwikkeling - plattelandsontwikkeling - landbouw - hulpbronnenbeheer - sociale economie - natuurlijke hulpbronnen - productiviteit - grondbeheer - deelpacht - pachtstelsel - duurzaamheid (sustainability) - ethiopië - institutionele economie - economic development - rural development - agriculture - resource management - socioeconomics - natural resources - productivity - land management - metayage - tenure systems - sustainability - ethiopia - institutional economics
    Empirical investigation of the impact of institutional and socioeconomic factors on agricultural productivity and natural resource conditions is important for an informed evaluation of current policies, and to identify areas for future improvements. In this line, the current study addresses three topics of relevance to the process of agricultural intensification and natural resource management in the context of the less-favoured Highlands of Tigray,Ethiopia.

    The first topic assesses the impact of land contracting, in the form of sharecropping, on plot level crop and land management input use and intensity of use decisions, and the efficiency of resource use by tenants on their own and on sharecropped-in plots. Controlling for other socio-economic and biophysical factors, contrary to the predictions of the Marshallin theory of sharecropping, the study finds no statistically significant impact of tenancy status on input use and resource use efficiency at plot level.

    The second topic focuses on understanding of farmers' perceptions of rainfall-related production risk and uncertainty in the study area, and investigates how that influences their decisions on the intensity of plot level farm management input use and investment in land management. The findings show that farmers differ highly in their production risk perceptions even they face similar external circumstances and their socioeconomic features are found to account for such differences. Farm management input use and labour investment in land management by farmers did not show statistically significant associations with the risk perception of farm decision-makers.

    The third topic assesses the effectiveness of the household level labour quota system as a collective resource management institution employed in Tigray, and seeks to identify the household level factors that explain the degree of farmers' (non)-compliance with the system. The results from this assessment indicate the need for adapting the system to the changing socioeconomic circumstances of the households, and creating functional decentralized systems of resource management, considering the economic objectives of the human element.

    Overall, farmers' decisions on plot level farm management and investment for land improvement, and compliance with collective action institutions are influenced by their socioeconomic and institutional circumstances that require policy consideration. Therefore, policy interventions are necessary to alleviate major constraints for efficient resource use, create production risk management services, and promote self-sustaining systems of communal resource management in the region.
    Contract farming in Costa Rica: opportunities for smallholders?
    Sáenz-Segura, J.F. - \ 2006
    Wageningen University. Promotor(en): Arie Kuyvenhoven, co-promotor(en): Ruerd Ruben. - [S.l. : S.n. - ISBN 9789085044208 - 181
    economische ontwikkeling - contractlandbouw - kleine landbouwbedrijven - marktconcurrentie - landbouwproductie - hulpbronnenbeheer - export - peper - Sechium edule - Costa Rica - ketenmanagement - institutionele economie - economic development - contract farming - small farms - market competition - agricultural production - resource management - exports - pepper - Sechium edule - Costa Rica - supply chain management - institutional economics
    Transaction costs and other market failures are widely present in the agricultural sector of emerging economies and negatively affect to low-income smallholders, making difficult their integration into dynamic agri-food supply chains. Earlier literature mentions contract farming as an economic institution with the potential to incorporate smallholders into more advanced markets and strength supply chain integration. However, the application of contract farming in some countries of Latin America has shown diverging experiences and the mere presence of contracts does not assure the sustainability of trade relationships. This research seeks to analyze the effectiveness of contract farming as a market institution between smallholders and agro-processing firms in Costa Rica. The research aims to identify and analyze the following key issues: (1) structural characteristics of the two typical agri-food supply chains for non-traditional products, namely pepper ( Piper nigrum L.) and chayote ( Sechium edule Sw.); (2)patterns of behavior adopted by the agents for adapting or adjusting to the market where they operate under given contractual arrangements; (3) effectiveness and rationale of the current contractual arrangement; and (4) opportunities and constraints for improving the contractual arrangement between the firm and the farmers. To address these issues, we rely on an analytical framework based on the Structure-Conduct-Performance approach, and a modeling assessment of organizational strategies under monopsonic market conditions. These frameworks enables us to analyze and explain the different strategic interactions between two parties (firm and farm), given the set of expected asymmetries of information and transaction costs that they are facing.

    In Chapter 2 we first analyze the causes of market failures in developing countries and the emergence of alternative institutions as response to such market failures. Contract farming is a form of governance that emerges in response to market failures for credit, insurance, information, factors of production, outlet produce; and transaction costs associated with the search of prices and markets, transfer of technology, and distribution of bargaining power, monitoring and enforcement in a transaction with a second party (Grosh, 1994; Key and Runsten, 1999). For the next actor in the chain, namely the buyer firm, contracts assures him a continuous flow of product, at the right moment, with the desired characteristics, and without operating the whole production operation. Therefore, `contracts take an intermediate position between spot markets and full vertical integration, and correspond to certain level of supply chain management, as a suitable mechanism for distributing risk between the contracting parties. The literature points out three main non-exclusive categories for contracts, namely market specification, production management and resource-providing contracts. Resource-providing contracts are particularly important for enforcing sustainability criteria or for promoting quality upgrading. The selection of a specific type of contract depends on the type of commodity, the characteristics of the contracting parties, and the prevailing market conditions at a certain period of time. Moreover, uncertainty, bargaining power, asset specificity and enforcement are key issues for the selection of supply chain governance regimes. The opportunities for reaching and maintaining a win-win situation through an agreement depends on the level of mutual trust, the exchange of information between agents, the relative distribution of bargaining power, and the enforcement costs of the contractual terms. Successful integration of small and medium size farmers into export markets seems to depend particularly on the type of contract they maintain with the firm. This contract determines their income levels, degree of autonomy and the level of risk they accept or share with the firm, and influences their willingness to invest in quality improvements or resource conservation measures. Dynamic chain advantages can only be maintained when contracts enable farmers to adapt to these changing market demands. Besides, non-price factors implicit in the contract may positively affect farmers, by improving the efficiency in their production systems and contractual relationship.

    In Chapter 3we analyze the rationale and effectiveness of different types of contractual regimes, under two market configurations, between small-scale producers of pepper and agro-processing firms in the Northern region of Costa Rica. Particular attention is given to the incentives derived from contracts for the adjustment of production systems and livelihood strategies. Pepper is an attractive diversification activity for smallholders because it is a labor-intensive crop, does not require complex technologies or machinery, requires detailed attention and frequent disease control through the cropping cycle, and can reach high, fairly stable yields per hectare. This gives family farms a competitive advantage compared to large commercial plantations. A major drawback for small farmers are the high entry costs during the start-up phase, necessary for initial investments in crop establishment and the long maturation time before the first harvest. Contracts may be helpful as a strategy for overcoming these constraints and permit market access at reduced levels of uncertainty (Dorward, 2001).

    In the Costa Rican pepper sector we can distinguish two different market situations (competitive market and local monopsony) and three types of contractual arrangements (written contracts, verbal commitments and none agreement).The data analysis has been conducted making use of the Structure-Conduct-Performance framework (Bain, 1968; Martin, 1993) for the operations on the pepper market, followed by a statistical analysis of household and production characteristics to identify the determinants and effects of contract choice, and to estimate the importance of contracts for resource use efficiency. We conducted a survey amongst pepper producers using a semi-structured questionnaire to obtain data on production systems and marketing arrangements. We successfully collected data from 50 producers, which represented 65% of all pepper producers related to three processing companies.

    he analysis of market channel choice indicates that income-constrained farmers require contracts especially in the early phase of the establishment process of perennial crops as a guarantee for their investment efforts. In subsequent phases and under more competitive market conditions, producers prefer verbal commitments to written contracts. Furthermore, in the absence of penalties, pepper farmers with delivery commitments may become disloyal to their buyer in markets with increased competition. Most farmers keep selling the major share of the harvest to their fixed buyer but deliver small volumes to competitors as well. Consequently, contracts fulfill rather different roles during the farm household life cycle and are shaped differently under various market conditions. The analysis has also revealed that the sources of income have a clear effect on farmer's contract choice and bargaining power. Income diversification enables farmers to increase their asset specificity in pepper crops, even without the insurance provided by contracts. Besides, farmers with contracts are definitely investing more inputs and time in soil maintenance activities on their pepper plots. Resource-providing contracts in the competitive market have a stronger effect than simple market specification contracts in the monopsonistic segment. This confirms the literature regarding the importance of resource-providing contracts and vertical integration for sustainable agricultural intensification (Kuyvenhoven and Ruben, 2002). Budget-constrained farmers that intend to tailor their investment decisions in line with the designed technological package may substitute for their default in fertilizer use with additional labor investments in soil maintenance activities. Farmers without agreements can still be efficient pepper producers, but maintain substantially lower investments for resource management.

    The effect of contracts under different market situations indicates that local monopsonies might generate rather perverse incentives for making fixed investments in pepper plantations compared to situations where competition between buyers exists. We have recorded yields per hectare that are substantially lower in the monopsony region, even when farmers use more inputs. Local monopsonies could favor a transition towards more capital-intensive production systems, especially when relying on resource-providing contractual regimes that (temporarily) reduce input costs. This points to close complementarities between the decisions on technology choice and the type of market organization. Finally, farmers with contracts are usually better informed and more committed to the agreement with the buyer. However, the loyalty of these farmers is likely to be more related to their lack of bargaining power rather than to the availability of market information.

    In Chapter 4 we determined the critical factors that make chayote producers eligible for export delivery to traders-processors and we analyze the impact of contracts on quality performance and loyalty relations within the chayote supply chain. Indigenous vegetables, like chayote, represent an increasing share of non-traditional exports from Costa Rica. Farmers' possibilities to become engaged in global agro-food chains depend on the relationships established with packers and (inter)national brokers. Farmers who are able to deliver better quality and stable amounts tend to become preferred suppliers. Harvesting the crop at an immature stage and quick delivery to exporters improve post-harvest shelf-life and quality, since storage affects the firmness, appearance, flavor and nutritional value (Marín-Thiele, 1997). Contractual agreements may be helpful to reduce farmers' uncertainty and are intended to increase their loyalty towards the processor-exporter. While prices paid to the farmers are only slightly higher than those of the national market, other purchase conditions - like the terms of payment, the provision of credit for inputs and the frequency of collection - are equally or more important for the decisions regarding outlet choice (Hart and Holstrom, 1987). Furthermore, additional services ( i.e. seed, credit and technical assistance) enable farmers to improve their product quality at relatively low costs, whereas can be helpful to control farmers' opportunistic behavior (Chiarelli et al. , 2002). Farmers who deliver chayote to exporters make higher amounts for inputs and labor use, but face delays before receiving their final payment. Therefore, specialization in chayote production is only a feasible option when delivery contracts provide sufficient certainty. We use an analytical framework based on the Structure-Conduct-Performance approach (SCP) (Bain, 1968; Martin, 1993). Robust parameter estimates from binary regressions are presented to examine the determinants of farmers' engagement in export production. Tobit and Logit models are used to examine the probability of contractual engagements between producers and exporters, and to analyze the key factors influencing quality performance and loyalty. Field data were collected from chayote producers located in approximately fifteen villages in the valley of Ujarrás in central Costa Rica. 120 farmers were selected using a stratified sampling technique of a total population of 450 chayote producers, separated in two categories: traditional chayote producers and IDA settlers.

    Contracts provide an important device for improving security and enhancing the involvement of smallholders in international marketing chains. Farmers delivering under (in)formal contracts with processors/exporters have better access to credit, critical inputs and information, enabling them to benefit from economies of scale and scope. Producers' preferences for a certain processor-exporter are determined by the price paid for their product, but non-price factors (such as access to credit, technical assistance and market information) appear to be equally or more important. Moreover, prices appear to be positively related to export contracts, and these contracts in turn provide incentives for the intensification of chayote production systems. The existence of a contract improves the certainty for the producer, enabling investments in land improvements and better crop management. No direct relation was found, however, between contractual delivery and the quality of the produce, but a strong impact on loyalty was confirmed. Therefore, contracts influence farmers' production systems and household revenues in two different ways. In the first place, quality is improved as a result of better land use and more labor available for crop management and handling. This is mainly guaranteed through the selection of recently settled farmers with larger families as contractual partners. In the second place, loyalty is increased especially when these farmers can be ensured high delivery frequency. The latter is particularly important to maintain post-harvest quality and reduce rejection rates. Loyalty with processors/exporters requires contractual arrangements including provisions for technical assistance and market information as well as adequate facilities for timely product delivery and payment regimes.

    In Chapter 5 we analyze the dynamics of contracts in the pepper supply chain of Costa Rica. There are no spot markets for pepper and since 2001 only one processor buys fresh pepper from producers under defined quality conditions. Yet, rejection rates are in average of 10 percent of each delivery. This is a very sensitive issue for low-income farmers and one of the most common sources of distrust with the processor that tend to discourage the continuation of the relationships. Product rejection is mainly caused by two factors: (1) deficient transport conditions and (2) immature pepper included in the deliveries. Since most farmers act individually at the moment of the delivery, these two factors cause rejection rates that are partially out of their control. We explore possible forms of collective action amongst farmers with the aim of increasing the quality of pepper by improving transport conditions and organizing monitoring at the point of collection. This could reduce rejection rates and increase the farmers' bargaining power. Yet, the costs of organizing collective action should be less than the potential income increase that results from a reduction of refused pepper and/or the received price premium. We conduct the analysis for 19 farm-households from El Roble settlement; since this was the only group that started a peasant organization when market conditions changed from a competitive situation in the year 2000 to a monopsonistic market in the year 2001. We design a non-linear integer simulation model inspired by the modeling approach proposed by Dorward, (2001), which can maximize the processor's and farmers' gross income (value of sales less value of variable and fixed costs, not including labor, capital and land costs). We compare different delivery scenarios searching for hybrid organizational forms, and assess the associated trade-off between governance costs and benefits that could optimize farmers' income and processors' profit.

    Our model scenarios simulate the effects of collective action under initial monopsonic market conditions[1]. The model results indicate that low procurement prices of fresh pepper can make the farmers breach the group contract, even between different seasons in the year. It is furthermore shown that group contracts are only rational when higher prices prevail. To justify the group contracts, the costs of organizing collection and transport and the membership fee should be lower than the gains reached from the lower rejection rates. If the price is too low, or the organization costs are too high, the farmers may prefer individual contracts, even if the rejection rates are high. At higher prices, they have an incentive to organize the collection and transport of the pepper through the group. The model shows that the firm should not overuse its bargaining power beyond this self-enforcing price range as the farmers might easily breach the contracts. Furthermore, group contracting can be beneficial for risk-averse farmers in either the low or high season. We also simulate what type of governance structure is chosen when the selling price is endogenously established in the model and the income of the processing firm and the farmers is maximized. This analysis demonstrates that under certain conditions the incomes of the monopsonic processing firm and the farmers' association are jointly maximized by a group contract, enforced by low opportunistic behavior from both agents. The model shows that the processing firm is better-off dealing with a group contract instead of a multiple set of smaller individual contracts when farmers show low opportunistic behavior; even in the monopsonistic market situation. The latter outcome is important in the sense that collective action might be needed only under certain market conditions, but not all the time. The model forecasts a breach of the group contract under conditions of low supply of fresh pepper just because it becomes too expensive or unattractive. However, if the production remains stable throughout the year, with regular weekly supplies and limited season variation, group contracts will be preferred all the time. For the future development of pepper production in Costa Rica, an increase in productivity and stabilization of production throughout the year is required, with the aim of increasing (and especially stabilizing) the frequency of transactions, to improve the trust between actors, encourage low opportunistic behavior, and thereby strengthening the prospects for vertical integration between the parties. This can be done by changing the present market-specification contract for a production-management contract. Otherwise, under irregular supply through the year seasonal contracts will be still the best scenario.

    In Chapter 6 we present the most important findings of this thesis and some related policy implications. The present research emphasized inthe analysis of supply chains for the pepper and chayote case studies by focusing on differences in the characteristics of the commodities as well as the types of farm households and the derived implications for market configuration and contract choice . This comparison enabled us to yield insights on the endogenous character of the selected contractual arrangements (Escobal et al. , 2000) and draw pertinent conclusions regarding the efficiency and equity effects of supply chain cooperation.

    Our analysis of farmers' contract choice in both supply chains led us to identify three major functions of contracts, namely (1) a security device to enable farmers to take up a new production activity and to gain access to specialized markets; (2) a provision of incentives for investment and thus increase the asset-specificity on the farmer's side; and (3) a provision of information about the structure of the market where they operate, which is very important to prevent false expectations and adverse selection problems. These functions yield certain effects on the farmers' decisions regarding resource allocation and supply chain integration. We therefore discussed the implications of contracts for guaranteeing smallholder access (equity), for production efficiency, and for the long-term sustainability of supply chain cooperation.

    Finally, we draw some public and private roles for enhancing supply chain integration. While contracts are essentially private, there is still an important place for public action to safeguard the efficiency, equity and sustainability of supply chain cooperation. Contract farming can become an integral part of agrarian policy-making, where the government, together with farmers and firms, joins efforts and interests in order to promote an inclusive strategy of local sustainable development. This strategy should include public interventions for regulating market access ( i.e. definition of a framework for legal enforcement and recourse), providing information and control ( i.e. definition of minimum public grades and standards), and promoting farmers' organization. Moreover, governmental support is required for supply chain coordination towards product and process upgrading are of utmost importance. Through these interventions, a framework can be implemented to enhance bargaining power and reduce the institutional risk for smallholder producers willing to participate in contract farming.

    [1] As soon as all farmers, in a specific location, form a group or a cartel, the market condition changes to a bilateral monopoly.
    Van horizontale naar verticale samenwerking in de agrosector: verklaringen vanuit de institutionele economie
    Bijman, J. - \ 2004
    Tijdschrift voor sociaalwetenschappelijk onderzoek van de landbouw 19 (2004)3. - ISSN 0921-481X - p. 143 - 154.
    agrarische economie - boeren - samenwerking - verticale integratie - agrarische bedrijfsvoering - ketenmanagement - institutionele economie - agricultural economics - farmers - cooperation - vertical integration - farm management - supply chain management - institutional economics
    Het accent bij samenwerking in de agrarische sector is van samenwerking onderling meer verschoven naar verticale samenwerking. De institutionele economie biedt hierbij een theoretisch kader voor de studie naar de wijze, waarop ondernemingen hun onderlinge samenwerkingsrelaties organiseren, waarbij o.a. naar motieven voor samenwerking is gekeken
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