Content
The course provides an overview about firm behaviour and markets in modern agri-business.
Topics discussed include:
• Competition and market power in modern agro-food markets
• The role of intermediaries and modern food retail
• Strategy interactions among firms
• Vertical relations and coordination in modern agro-food markets
• Motivation and the incentive problem
• Complete, incomplete and relational contracts: applications in food sector
Learning outcomes
After successfully completing the module, students will be able:
• To describe the key features characterizing modern food and agricultural markets;
• To describe the governance forms and modes of organisation in agribusiness;
• To explain the role of intermediaries and modern food retail and the role of coordination for the
provision of quality;
• To explain the role of competition, market power and coordination in modern agro-food markets;
• To apply analytical tools to analyse strategic firm behaviour;
• To analyse strategic firm behaviour;
• To explain coordination and the conditions for efficient coordination;
• To design contracts that solve incentive misalignment problems;
• To apply key concepts of contract design to real-life problems in agribusiness and to analyse
outcomes of contractual arrangements;
Examination
A written examination of 90 minutes is deemed an appropriate mode of examination. The written
tests the ability of students to:
- describe and explain: (i) the key features characterizing modern food and agricultural markets;
(ii) the role of intermediaries and modern food retail; (iii) the governance forms and modes of
organisation in agribusiness; and (iv) the role of coordination for the provision of quality.
- Analyse: (i) static and dynamic strategic behaviour of firms; (5) opportunistic behaviour,
incentives, commitments and self-enforcement in contractual arrangements.
Students will be permitted to use non-programmable calculators during the examination. The
examination carries a 50% pass mark.
Homework is assigned to students during the semester. The homework will not contribute to the
final course mark. Homework can be delivered in writing or in the form of a short oral presentation
and discussion of the subject matter.
Prerequisites
Undergraduate class work in business management, strategic management,or organizational
behaviour, governance and agricultural economics.
Teaching & learning methods
A variety of teaching methods will be adopted to optimize structure and rhythm:
• Lectures
• Interactive methods
• In-class experiments
• Discussion of relevant literature
• Practice exercises.
Media & reading list
Teaching aids employed include: textbooks, hand-outs, whiteboard, PowerPoint.
Recommended textbook
- J. Church and R. Ware, Industrial Organization: A Strategic Approach, first edition, McGraw-Hill,
2000. (available for free online)
- P. Milgrom and J. Roberts, Economics, Organization & Management, Prentice Hall, 1992.
Following journal articles are presented in class. Additional readings (e.g., scientific journal articles)
will be suggested during the lectures.
- Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review
of international political economy, 12(1), 78-104.
- Levin, J. (2003). Relational incentive contracts. American Economic Review, 93(3), 835-857.
- Sexton, R. J. (2012). Market power, misconceptions, and modern agricultural markets. American
Journal of Agricultural Economics, 95(2), 209-219.
- Wu, S. Y. (2014). Adapting contract theory to fit contract farming. American Journal of Agricultural
Economics, 96(5), 1241-1256.
Other suggested references:
1. Jean Tirole: Industrial Organization.
2. Belleflamme and Peitz: Industrial Organization: Markets and Strategies.
3. Motta: Competition Policy: Theory and Practice
References 1 and 2 are the classical references for industrial organization models; and reference 3
focuses on antirust and related economics models
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