Abstract
Agricultural markets have changed over time, along with the nature and scope of U.S. agricultural production. There has been a shift from spot markets to a variety of alternative vertical exchange mechanisms (Knutson, p. 127). Examples include forward market contracting, vertical integration, cooperatives, and electronic contract marketing. This shift has concerned farmers, researchers, and government agencies because less is known about the interpretation of price differences from one transaction to another when the same exchange instrument is used (i.e., a contract). Jesse and Johnson demonstrated that different contract specifications resulted in different negotiated contract prices. Although their study was a significant contribution, the underlying structure generating the different prices was not explored. This paper utilizes the hedonic framework developed by Rosen to analyze potato contract prices in the Hastings, Florida, growing area. It was hypothesized that there were numerous and varied services associated with vertical exchange mechanisms (Carl). Implicit payments, which affect observed prices, were made and received for these services.
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