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The Effect of Cooperatives on Quality‐Enhancing Innovation

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  • Kyriakos Drivas
  • Konstantinos Giannakas

Abstract

This paper develops game‐theoretic models of heterogeneous consumers to analyse the effect of cooperatives 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 open‐membership consumer co‐op competes with an investor‐owned firm in markets for horizontally differentiated products. Analytical results show that the involvement of the member welfare‐maximising co‐op in innovation activity can change the nature of product differentiation and the structure of the market, and be quality and welfare enhancing by increasing innovation activity and reducing the prices of food products. The effects of co‐operative involvement are shown to depend on the degree of consumer heterogeneity and the size of innovation costs.

Suggested Citation

  • Kyriakos Drivas & Konstantinos Giannakas, 2010. "The Effect of Cooperatives on Quality‐Enhancing Innovation," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 295-317, June.
  • Handle: RePEc:bla:jageco:v:61:y:2010:i:2:p:295-317
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    File URL: https://doi.org/10.1111/j.1477-9552.2009.00236.x
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    Cited by:

    1. François Bareille & Florence Bonnet-Beaugrand & Sabine Duvaleix-Tréguer, 2017. "Objectives’ alignment between members and agricultural cooperatives," Review of Agricultural, Food and Environmental Studies, Springer, vol. 98(1), pages 75-91, July.
    2. Rousselière, Damien, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration of cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Surviv," Working Papers 264214, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    3. Panagiotou, Dimitrios & Stavrakoudis, Athanassios, 2018. "Free-on-board and uniform delivered pricing strategies in pure and mixed spatial duopolies: The strategic role of cooperatives," The Journal of Economic Asymmetries, Elsevier, vol. 18(C), pages 1-1.
    4. Rousselière, Samira & Rousselière, Damien & Ramani, Shyama, 2016. "Innovation Led Alliances: Theory and application to the GM Plant Industry," 149th Seminar, October 27-28, 2016, Rennes, France 244949, European Association of Agricultural Economists.
    5. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    6. Rousselière, Damien & Joly, Iragäel, 2011. "A propos de la capacité à survivre des coopératives : une étude de la relation entre âge et mortalité des organisations coopératives agricoles françaises," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(3).
    7. Viaggi, Davide & Cuming, David, 2013. "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), pages 1-6, February.
    8. repec:bla:jageco:v:68:y:2017:i:2:p:427-450 is not listed on IDEAS

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