The Effect Of Cooperatives On Product Innovation In The Agri-Food System
AbstractThis paper develops a game-theoretic model of heterogeneous consumers to analyze the effect of cooperative involvement on quality-enhancing product innovation activity, the pricing of food products, and the welfare of the groups involved in the context of a mixed duopoly where an openmembership consumer co-op competes with an IOF. Analytical results show that the involvement of the member welfare-maximizing co-op in R&D can be quality and welfare enhancing by increasing the arrival rate of product innovations and reducing the prices of food products. The effectiveness of the coop is shown to depend on the nature of product differentiation and the relative quality of its products, the degree of consumer heterogeneity, and the size of innovation costs.
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Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21223.
Date of creation: 2006
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cooperatives; product innovation; mixed oligopoly; retained earnings; Agribusiness;
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