Relational Contract:A Research To The Stability Of Agricultural Products Transaction

As an organization of scale business of agriculture under the condition of small-sized family production, the form of"Dragon Head Enterprise+Farmer"gained the supporting by the government's policy and recognizing by the theoreticians because it facilitated the development of agricultural industrialization developing by linking the"small farmers"and"lagre market"together through the long lasting contract butweem Dragon Head Enterprise and farmers, and the reasonable allocating of exchange residuals and the related risks to the transaction. However, the weak stability of agricultural products transaction contract caused by high rate of contract breaching has long being the obstacle to the agricultural industrialization developing despite there were successful cases in practice, so upgrading the stability of transaction contract is the key to facilitate the development of agricultural industrialization.Upgrading the stability of transaction contract depends on contract choice and the optimizing of enforcing mechanism of contract. The high rate of contract breaching is motivated by the opportunistic behavior of the contract parties. This dissertation hold that the uncertainties in the agricultural products transaction①was the root of the weak stability of agricultural products transaction, the uncertainties in agricultural products transaction including the uncertainties that farmers and enterprises confronted with, which origined form"bounded rationality"of bargainers, asymmetric information, incomplete information and asymmetric station of bargainers (caused the asymmetric negotiation power). These uncertainties determined the stability of agricultural products transaction by restricting the achievement and allocation of exchange residuals.As an institutional arrangement to fit uncertainties, relational contract is inevitable for agricultural products transaction②. So the logic from uncertainties to relational contract is the logical starting point involuntarily, and due to the difficulty of the enforcing by the third party, the self-enforcement mechanisms of relational contract are the keys to agricultural products transaction governance.Accordingly, the agricultural products transaction relational contract is proper access to the research. This dissertation discuss the problem of weak stability of agricultural products transaction, and carry out the research including the following aspects: 1)Analysing the logic between the uncertainties in the agricultural products transaction and corresponding contract choice(relational contract), designing the corresponding model of contract;2)As the the institutional arrangements, relational contract give a terse framework of agricultural products transaction. The achievement and allocation of exchange residuals changed with the circumstance of transaction, and the disputes are inevitably. The dispute-settlement mechanism of relational contract was discussed following; 3)the governance of agricultural products transaction by relational contract through the self-enforcing mechanism. The dissertation analysed the self-enforcing mechanism of agricultural products transaction relational contract under the hypotheses that farmers are risk adverseness and bounded rationality; 4)Cmpared the relational forms supporting the transaction of agricultural products with different specificity based on suvery data, and the model of agricultural products transaction governance mode based on trust induced by reciprocity are also gived.Concretely, the following aspects were researched in this dissertation.Firstly, the uncertainties and their exhibit forms existing in agricultural products transaction were distinguished and analysed, their impacts upon the agricultural products transaction was analysed, and the corresponding contract choice problem was concluded.Sceondly, under the hypothesis that farmers are risk adverseness, based on the model made by Levin (2003), and take the relational specific investment by farmers, and circumstance uncertainties and so on into account, applied the relational contract theory to the pratices of chinese agricultural industrialization developing, modify the concept of stationary contract, conceive agricultural products transaction relational model based on ex-post retained earnings, and the influnces by negociation power and specific assets on the structure and the effectiveness of relational contract were also analysed .Thirdly, the applying scope and limitedness of GNBS and the fixed-price contract as the dispute-settlement mechanisms were compared. On the base of analyses the limitedness of fixed-price contract in agricultural products transaction, GNBS and the fixed-price contract were induced into the relational contract as the dispute-settlement mechanisms, and their function of enhancing the stability of relational contract, and their applying scope and limitedness were compared. So, a framework of settling the opportunism behaviors under repeat transaction was set up.Lastly, the limitation and fabulosity of self-enforcing mechanism based on repeated geme in governing the transaction of agricultural products is analysed. While the self-enforcing mechanism based on"relational forms embedness"can be the choice of governance of agricultural products transaction in China consequentially. An factor analysis based on the survey data to acquire the the critical relational forms supporting different sorts of agricultural products transaction were given, and the governance mode based on the trust inspired by reciprocity were given.In conclusion, the innovation of this dissertation can be summarized three aspects:①Under the hypotheses of"risk averseness"and"bounded rationality", and the basic of the logic of the uncertainties in agricultural products transaction, the dissertation designed the agricultural products transaction relational contract models based on ex-post retained earnings considering specific investment by farmer ande the uncertainties of surroundings confronted with farmer. The impacts on the structure and efficiency of relational contract by negotiation power and the specialty asset were analysed the concept of Stationary Contracts was modified, so the model conceived by Levin (2003) was developed.The dissertation also inducted the GNBS and formal fixed-price into the relational contract as the approaches to settle disputes, analysed their functions to strengthen the self–enforcement of relational contract, and their applied ranges and pre-conditions to strengthen the self–enforcing of relational contract, so a framework to settle the problem of opportunism was given. The existing related literatures noticed the stability-upgrading function of relational contract, whereas, they are focused on the analyses of the character, the significance, the relational forms'governance function, and so forth. The re-designingof the model of relational contract and the analyses of dispute settlement mechanisms have deepened and developed the researches of the existing literatures.②The self–enforcement is the foundation of governance of agricultural products transaction by relational contract. The dissertation sorted the self–enforcement mechanisms of relational contract into two types, one is based on repeated game, the other is based on"social forms embedness". Under the hypotheses of"risk averseness"and"bounded rationality", the dissertation analysed the limitedness of mechanism based on repeated game ( in the view of economics), and the realism and validity of mechanism based on"social forms embedness". The existing related literatures emphasized particularly on the mechanism based on repeated game, and did not paid enough attention to the farmers'rationality ability and attitude to the risk (which are critical to the chontract choice of agricultural products transaction). The probing into the mechanism of governance of agricultural products transaction by relational contract in this dissertation have strengthened the pertinency and reality of relational contract.③The dissertation noticed the fact that critical forms supporting different sorts of agricultural products transaction changed and developed with circumstance, that is, the forms governing agricultural products transaction changed with the agricultural products sort, even the forms governing same type of agricultural products changed with the social and economic circumstance and the parties'individual factors. The datas for analyzing is sort into two types according to agricultural products's specificity(the range of outside choice), so the key forms supporting different sorts of agricultural products are acquired as the gists to upgrade the stability of agricultural products transaction, and the model of agricultural products transaction governance based on trust inspired by reciprocity are also gived. The existing related literatures take the function of governance of relational forms as fixed and universal, so the research of key forms supporting different sorts of agricultural products transaction is innovative.