One cow, one vote?
AbstractThis paper considers investment decisions in a farmers' cooperative. Farmers sell their products through the cooperative. Before production takes place the cooperative has to decide on an investment. This is done by a vote in which each farmer has one vote, regardless of economic size. The paper asks whether this leads to efficient investment decisions. The answer depends on how the cost of the investment is distributed among the farmers. The main result of the paper is that if the cost is paid out of retained earnings, the investment decision of a large cooperative will be approximately efficient.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1997-01.
Length: 21 pages
Date of creation: Feb 1997
Date of revision:
Publication status: Published in: Scandinavian Journal of Economics, 99(4), 1997, 597-615
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Other versions of this item:
- L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
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- Liang, Qiao & Hendrikse, George W. J. & Huang, Zuhui, 2010. "Value added and governance structure: Evidence from the pear industry in China's Zhejiang province," IAMO Forum 2010: Institutions in Transition â Challenges for New Modes of Governance 52708, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
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- Oliver Hart & John Moore, 2004. "Cooperatives vs. Outside Ownership," ESE Discussion Papers 114, Edinburgh School of Economics, University of Edinburgh.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," NBER Working Papers 6421, National Bureau of Economic Research, Inc.
- Bontems, Philippe & Fulton, Murray, 2009. "Organizational structure, redistribution and the endogeneity of cost: Cooperatives, investor-owned firms and the cost of procurement," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 322-343, October.
- Maxime Agbo & Damien Rousselière & Julien Salanié, 2013.
"A Theory of Agricultural Marketing Cooperatives with Direct selling,"
- Maxime Agbo & Damien Rousselière & Julien Salanié, 2013. "A Theory of Agricultural Marketing Cooperatives with Direct Selling," Working Papers 1331, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- Kyriakos Kyriakopoulos & Matthew Meulenberg & Jerker Nilsson, 2004. "The impact of cooperative structure and firm culture on market orientation and performance," Agribusiness, John Wiley & Sons, Ltd., vol. 20(4), pages 379-396.
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