Contract Incentives and Excessive Nitrogen Use in Agriculture

Journal of Agricultural and Resource Economics

关键词: agriculture;    environmental externalities;    nitrogen use;    tournament contracts;   

DOI  :  10.22004/ag.econ.30902

来源: DOAJ

【 摘 要 】

This study examines incentives for input use under tournament contracts. We analyze implications of contract design for nitrate-based environmental externalities generated by agricultural producers. Outcomes are compared from contracts awarded by tournament to those from fixed-payment contracts. Our findings show contract insecurity can distort input use. The model developed in this analysis is applied to a region of the U.S. where tournament-based production is prevalent and groundwater contamination is a problem. We find contract insecurity increases nitrogen use by about 12%, resulting in a 17% increase in nitrate leaching. Implications for contract modification to reduce environmental externalities while maintaining contract incentives are discussed.

【 授权许可】

Unknown