Hostname: page-component-5c6d5d7d68-qks25 Total loading time: 0 Render date: 2024-08-14T06:26:55.920Z Has data issue: false hasContentIssue false
  • English
  • Français

Growers vs. Merchants Bargaining on the Price of Champagne Grapes and The Role of Contracts when Bargaining is Unbalanced*

Published online by Cambridge University Press:  08 June 2012

Claire Chambolle  and
Olivier Saulpic
Claire Chambolle
Affiliation:
INRA, LORIA, 65 Boulevard de Brandebourg, 94205 Ivry sur Seine; Laboratoire d'Econométrie de l'Ecole Polytechnique, 1 rue Descartes, 75005 Paris; e-mail:chamboll@ivry.inra.fr and chambolle@shs.polytechnique.fr.
Olivier Saulpic
Affiliation:
ESCP-EAP, 79, avenue de la République, 75011 Paris, e-mail:saulpic@escp-escp-eap.net.
Get access Rights & Permissions [Opens in a new window]

Abstract

The contract between growers and merchants for the exchange of grapes on the Champagne market is a long-term agreement based on quantities. Commitments on quantities are made for several years and negotiated individually between growers and merchants. Each year, prices are negotiated at the interprofessional level, the interprofessional committee including members of the growers union, members of the merchants union and a government commissioner. It turns out that industrial organization theory, and more precise mechanisms outlined by incomplete contract theory are relevant to the analysis of such contracts in which prices and quantities are negotiated sequentially and by different groups of actors. We show that imposed pricing by the interprofessional organization can, in some cases, balance the bargaining power between growers and merchants and thus increase social welfare. At a time when the European Common Organization of Wine Markets casts doubt on interprofessional organizations, this result tends to justify their positive role. (JEL classifi cation: L42, L50)

Type
Articles
Information
Journal of Wine Economics , Volume 1 , Issue 2 , Fall 2006 , pp. 95 - 113
Copyright
Copyright © American Association of Wine Economists 2006

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Giraud, E., Soler, L.G., and Tanguy, H. (1999). Avoiding double marginalization in agro-food chains. European Review of Agricultural Economics, 26, 179–198.CrossRefGoogle Scholar
Giraud-Héraud, E., Soler, L.G., Steinmetz, S., and Tanguy, H. (1998). La régulation de l'offre dans le secteur viticole est-elle justifiée économiquement? Cahiers de Grignon, 98/05, INRA, Grignon.Google Scholar
Grossmann, S. and Hart, O. (1986). The cost and benefits of ownership: A theory of vertical and lateral integration. Journal of Political Economy, 94, 468–505.CrossRefGoogle Scholar
Grout, P. (1984). Investments and wages in the absence of binding contracts: A Nash bargaining approach, Econometrica, 52, 449–460.CrossRefGoogle Scholar
Hart, O. and Moore, J. (1994). A theory of debt based on inalienability of human capital. Quarterly Journal of Economics, 109, 841–879.CrossRefGoogle Scholar
Mussa, M. and Rosen, S. (1978). Monopoly and product quality. Journal of Economic Theory, 18, 301–317.CrossRefGoogle Scholar
Soler, L.G. and Tanguy, H. (1998). Relations contractuelles et négociations interprofessionnelles dans le secteur des vins de Champagne, Gérer et Comprendre, 74–76.Google Scholar
Tanguy, H. (1989). La réhabilitation des modèles et des plans dans l'entreprise: le cas d'une maison de Champagne. Cahiers d'Economie et Sociologie Rurales, 10, 25–64.CrossRefGoogle Scholar
Tirole, J. (1999). Incomplete contracts: where do we stand? Econometrica, 67, 741–782.CrossRefGoogle Scholar
Williamson, O. (1975). Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press.Google Scholar