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

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  • Drivas, Kyriakos
  • Giannakas, Konstantinos

Abstract

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.

Suggested Citation

  • Drivas, Kyriakos & Giannakas, Konstantinos, 2008. "Process Innovation Activity in a Mixed Oligopsony: The Role of Marketing Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 36(2).
  • Handle: RePEc:ags:jlorco:163490
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    File URL: http://purl.umn.edu/163490
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    References listed on IDEAS

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    1. Richard J. Sexton & Terri A. Sexton, 1987. "Cooperatives as Entrants," RAND Journal of Economics, The RAND Corporation, vol. 18(4), pages 581-595, Winter.
    2. 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.
    3. Albaek, Svend & Schultz, Christian, 1998. "On the relative advantage of cooperatives," Economics Letters, Elsevier, vol. 59(3), pages 397-401, June.
    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. Berit Tennbakk, 1995. "Marketing Cooperatives In Mixed Duopolies," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 33-45.
    6. 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.
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    Cited by:

    1. Viaggi, Davide & Cuming, David, 2012. "Innovation in Multiple Networks and Networks of Networks: The Case of the Fruit Sector in Emilia-Romagna," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 3(3).
    2. Merel, Pierre R. & Saitone, Tina L. & Sexton, Richard J., 2009. "Cooperatives and Quality-Differentiated Markets: Strengths, Weaknesses, and Modeling Approaches," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(2).

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