Product Differentiation and Segregation in Agricultural Systems: Non-Genetically Modified and Specialty Corn and Soybean Crops in Iowa

John Miranowski, Helen H. Jensen, S. Patricia Batres-Marquez, Ariun Ishdorj
February 2004  [04-WP 354]

An important dimension of product differentiation and segregation for specialty crops is the added handling and transaction costs incurred. Some forms of business organization may realize lower costs of providing such services, and if specialty crop production is growing relative to commodity production, these two factors may have implications for industry structure. We use data from an Iowa grain handling survey to test hypotheses developed in the non-empirical transaction-costs literature with respect to organizational and financial governance of cooperatives and private and corporate firms. Preliminary results are discussed with respect to business organizations, added costs, investments, crops, and contracting.

Keywords: contracting, cooperatives, corporations, grain handling, industry structure, segregation, specialty crops, transaction cost

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