More Trust Instead of More Vertical Integration in the German Pork Production? Empirical Evidence and Theoretical Considerations

It is often hypothesized that contracts and vertical integration are paramount for the future competitiveness of meat supply chains. In this paper we review empirical evidence and theoretical reflections underlying this argumentation. We confront the contract and integration hypothesis with transaction cost considerations taking into account current technological and institutional developments and results from a survey in German pig production. It is concluded that more trust and commitment in non-contractual long-term relationships may be a viable alternative to stricter vertical coordination in meat supply chains.