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European Review of Agriculture Economics Vol 27 (3) (2000) pp.325-345
© 2000 Oxford University Press and the Foundation for the European Review of Agricultural Economics

Transaction cost analysis of outsourcing farm administration by Belgian farmers

T Vernimmen, W Verbeke and G van Huylenbroeck

Ghent University, Ghent, Belgium

Summary

Modern farming is characterised by an increasing amount of regulation and hence of farm administration. This paper reports an empirical investigation of farmers' decisions regarding administrative tasks, and in particular the decision to outsource (part of) this administration. The theoretical framework is based on transaction cost economics, adapted and interpreted here to deal with services. The empirical analysis applies a probit model estimated using cross-section farm survey data. Results indicate significant differences in outsourcing related to characteristics such as farmers' age, farm size and institutional environment, as well as to factors such as the complexity, uncertainty and time requirements of the administration concerned.

Keywords: transaction cost economics, probit model, outsourcing, administration, Belgium


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