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Process Innovation Activity in a Mixed Oligopsony: The Role of Marketing Cooperatives

Listed author(s):
  • Drivas, Kyriakos
  • Giannakas, Konstantinos

This paper examines the market and welfare effects of cooperative involvement in cost-reducing process innovation activity in the context of a mixed oligopsony where an open-membership marketing co-op competes with an investor-owned firm. The presence of the marketing co-op is shown to result in increased producer prices and welfare gains for all farmers, members and non-members of the co-op. The effect of the marketing co-op on process innovation activity depends on the relative quality of its final products, the degree of producer heterogeneity, and the size of innovation costs. A comparison of our findings with those of Giannakas and Fulton (2005) on the impacts of input-supplying co-ops, reveals that, regardless of whether they are a backward or a forward integration of their members, parts of an oligopolistic or an oligopsonistic market structure, the involvement of cooperatives in process innovation can increase the innovation activity in the market, is welfare enhancing and, thus, socially desirable.

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File URL: http://purl.umn.edu/163490
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Article provided by Hebrew University, Center for Agricultural Economic Research in its journal Journal of Rural Cooperation.

Volume (Year): 36 (2008)
Issue (Month): 2 ()
Pages:

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Handle: RePEc:ags:jlorco:163490
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  1. Svend Albæk & Christian Schultz, 1998. "On the relative advantage of cooperatives," CIE Discussion Papers 1998-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  2. Berit Tennbakk, 1995. "Marketing Cooperatives In Mixed Duopolies," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 33-45.
  3. Kostas Karantininis & Angelo Zago, 2001. "Endogenous Membership in Mixed Duopsonies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1266-1272.
  4. Konstantinos Giannakas & Murray Fulton, 2005. "Process Innovation Activity in a Mixed Oligopoly: The Role of Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 406-422.
  5. Murray Fulton & Konstantinos Giannakas, 2001. "Organizational Commitment in a Mixed Oligopoly: Agricultural Cooperatives and Investor-Owned Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1258-1265.
  6. Richard J. Sexton & Terri A. Sexton, 1987. "Cooperatives as Entrants," RAND Journal of Economics, The RAND Corporation, vol. 18(4), pages 581-595, Winter.
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