Contracts and Quality in the California Winegrape Industry

We analyze the relationship between product quality and contractingchoices using the results of a survey of California winegrape growers.Growers who produce high-quality grapes are more likely to use formalwritten contracts than are growers who produce low-quality grapes.Written contracts for high-quality grapes are more likely to includeprovisions regarding the production process, while written contractsfor low-quality grapes are more likely to include explicit financialincentives for sugar content and other product attributes.