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An information economic rationale for cooperatives


  • Peter Bogetoft


We consider how to organise the processing and marketing of an agricultural product when farming costs are known only by the individual farmers. We show that when marginal costs are uncorrelated, the market for final goods is competitive, and the market for processing is non-competitive, the socially optimal production levels are sustained by a cooperative and a cooperative only. We show also that the cooperative form is particularly useful when the cost uncertainty is large and the net average revenue product is small. Copyright 2005, Oxford University Press.

Suggested Citation

  • Peter Bogetoft, 2005. "An information economic rationale for cooperatives," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(2), pages 191-217, June.
  • Handle: RePEc:oup:erevae:v:32:y:2005:i:2:p:191-217

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    References listed on IDEAS

    1. Richard E. Just & Rulon D. Pope, 1979. "Production Function Estimation and Related Risk Considerations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 276-284.
    2. Ayal Kimhi, 1995. "Differential Human Capital Investments and the Choice of Successor in Family Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 719-724.
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    Cited by:

    1. Pennerstorfer, Dieter & Weiss, Christoph R., 2012. "On the Relative Disadvantage of Cooperatives: Vertical Product Differentiation in a Mixed Oligopoly," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 40(1).
    2. Bošková, Iveta & Ratinger, Tomáš, 2014. "Structure, Innovations and Performance of the Czech Dairy Value Chain," 140th Seminar, December 13-15, 2013, Perugia, Italy 163349, European Association of Agricultural Economists.
    3. Pennerstorfer, Dieter & Weiss, Christoph R., 2007. "Do Cooperatives Offer High Quality Products?," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9403, European Association of Agricultural Economists.
    4. Pennerstorfer, Dieter & Weiss, Christoph R., 2011. "Do Cooperatives Offer High Quality Products? Theory and Empirical Evidence from the Wine Market," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115741, European Association of Agricultural Economists.

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