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Process Innovation Activity in a Mixed Oligopoly: The Role of Cooperatives

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  • Konstantinos Giannakas
  • Murray Fulton

Abstract

This article develops a sequential game-theoretic model of heterogeneous producers to examine the market and welfare effects of cooperative involvement in process innovation activity in the agricultural sector. The analysis examines an open-membership, input-supplying cooperative (co-op) that maximizes member welfare and finances its innovation activity through retained earnings. Analytical results show that the presence of the co-op can increase the arrival rate of innovations while reducing the price of agricultural inputs. Cooperative involvement in innovation activity can thus be welfare enhancing and socially desirable with its effectiveness being determined by the degree of producer heterogeneity and the size of innovation costs. Copyright 2005, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ajagec:v:87:y:2005:i:2:p:406-422
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2005.00731.x
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    Cited by:

    1. Agbo, Maxime & Rousselière, Damien & Salanié, Julien, 2015. "Agricultural marketing cooperatives with direct selling: A cooperative–non-cooperative game," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 56-71.
    2. repec:eee:jfpoli:v:73:y:2017:i:c:p:19-33 is not listed on IDEAS
    3. Damien Rousselière, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration for cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Survi," Working Papers SMART - LERECO 17-08, INRA UMR SMART-LERECO.
    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. repec:eee:spacre:v:19:y:2016:i:1:p:154-167 is not listed on IDEAS
    6. Maxime Agbo & Damien Rousselière & Julien Salanié, 2013. "A theory of agricultural marketing cooperatives with direct selling," Post-Print halshs-00949726, HAL.
    7. Garcia Alvarez-Coque, Jose-Maria & Lopez-Garcia Usach, T. & Sanchez Garcia, M., 2012. "Territory and innovation behaviour in agri-food firms: does rurality matter?," 126th Seminar, June 27-29, 2012, Capri, Italy 126030, European Association of Agricultural Economists.
    8. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    9. Nie, Pu-Yan & Yang, Yong-Cong, 2015. "Cost-reduction innovation under mixed economy," Economics Discussion Papers 2015-68, Kiel Institute for the World Economy (IfW).
    10. 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. 0(Number 2), pages 1-24.
    11. Ebata, Ayako & Velasco, Pamela & von Cramon-Taubadel, Stephan, 2015. "Distance to market and farm-gate prices of staple beans in rural Nicaragua," GlobalFood Discussion Papers 197540, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    12. repec:taf:specan:v:11:y:2016:i:3:p:340-354 is not listed on IDEAS
    13. Marcos Matás, Gustavo & Hernández Espallardo, Miguel & Arcas-Lario, Narciso, 2014. "La disposición a invertir en cooperativas agroalimentarias: el papel de la heterogeneidad y el oportunismo de los socios," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 0(Number 01), pages 1-19, June.
    14. Yu, Jianyu, 2009. "Quality Provision and Farmer Inclusion of Agricultural Cooperatives," 2009 Conference, August 16-22, 2009, Beijing, China 51553, International Association of Agricultural Economists.
    15. Bareille, François & Beaugrand, Florence & Duvaleix-Treguer, Sabine, 2016. "Objectives’ alignment between members and agricultural cooperatives," 149th Seminar, October 27-28, 2016, Rennes, France 244948, European Association of Agricultural Economists.
    16. Marco A. MARINI & Paolo POLIDORI & Desiree TEOBALDELLI & Alberto ZEVI, 2015. "Welfare Enhancing Coordination In Consumer Cooperatives Under Mixed Oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 505-527, September.
    17. Michael Kopel & Marco Marini, 2012. "Optimal Compensation Structure In Consumer Cooperatives Under Mixed Oligopoly," Working Papers 0512, CREI Università degli Studi Roma Tre, revised 2012.
    18. 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.
    19. Hoffmann, Ruben, 2006. "Quality policy, market structure and investment behavior in the food marketing chain," Department of Economics publications 1117, Swedish University of Agricultural Sciences, Department of Economics.
    20. Drivas, Kyriakos & Giannakas, Konstantinos, 2006. "The Effect Of Cooperatives On Product Innovation In The Agri-Food System," 2006 Annual meeting, July 23-26, Long Beach, CA 21223, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. 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. 0(Number 2), pages 1-26.
    22. Ebata, Ayako & Pacheco, Pamela Alejandra & Cramon-Taubadel, Stephan von, 2015. "Distance to market and farm-gate prices of staple beans in rural Nicaragua," 2015 Conference, August 9-14, 2015, Milan, Italy 211582, International Association of Agricultural Economists.
    23. repec:hal:journl:halshs-01098762 is not listed on IDEAS

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