VERTICAL INTEGRATION AND CONTRACTING IN THE U.S. POULTRY SECTOR

This paper provides an economic explanation of the existing market organization of the poultry industry. The vertical integration and the emergence of contracts with independent farmers is explained by risk sharing, technological progress and innovation dissemination, consumer demand for product reputation and uniform quality, and access to capital. In addition, the sources of growers' discontent with existing contracts are analyzed and the potential need for government regulation is discussed