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Abstract:
A protection price contract agrees that the company must purchase products from the farmer at the higher price from the market price and the contract price. The farmer's profit is protected in the mechanism of protection price contract. However, the farmer should pay a premium to obtain the right at higher selling price. To support the development of agriculture, we assume that governmental premium subsidy is provided for the farmer. Therefore, three participants including the farmer, the company and the government are involved. This paper firstly set up the coordination mechanism between the farmer and the company under the governmental regulation. Then, the explicit expressions of the optimal production size decided by the farmer with the objective to minimize the risk of CVaR, the contract price decided by the company to maximize its expected profit. Moreover, the effects of model parameters to the interests of the farmer, the company and the social welfare were presented. Finally, a numerical example was to be analyzed and some suggestions were presented. The results show that the market price risk is adverse especially for the firm that with larger risk aversion. Subsidy provided by the government is advantageous to improve the interests of the three participants. © 2018, Asian Association for Agricultural Engineering. All rights reserved.
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International Agricultural Engineering Journal
ISSN: 0858-2114
Year: 2018
Issue: 2
Volume: 27
Page: 265-272
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WoS CC Cited Count: 0
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ESI Highly Cited Papers on the List: 0 Unfold All
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30 Days PV: 1
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