This study investigates the determinants of cocoon prices under trade contracts that prevailed during the inter-war period in Japan between silk-reeling companies and cocoon farmer cooperatives (Tokuyaku Torihiki). The contract documents show that the process of cocoon price agreements incentivized the cooperative and its member farmers to improve ­cocoon quality and to reduce the risk of cocoon ­prices. However, the results of the estimated price determinants did not support these predictions. Competition with other forms of trade and between companies that adopted the trade contract might have weakened these functions of the trade contract.