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Cooperatives' shares in farm industries: Organizational and policy factors


  • Richard E. Caves

    (Harvard University)

  • Bruce C. Petersen

    (Assistant Professor of Economics, Northwestern University)


Cooperatives compete in farm-supply and marketing industries with investor-owned enterprises. Cooperatives' shares should depend on their distinctive organization: dealing “at cost” with members whose equities are tied to their current transactions with the cooperative. We show how this ownership structure affects cooperatives' activities and investment decisions, how it interacts with the public policies affording cooperatives special tax and antitrust status, and what these factors together imply for cooperatives' market shares and the extent of their vertical integration. Available data permit only informal tests of these predictions, but the evidence seems to confirm them strongly.

Suggested Citation

  • Richard E. Caves & Bruce C. Petersen, 1986. "Cooperatives' shares in farm industries: Organizational and policy factors," Agribusiness, John Wiley & Sons, Ltd., vol. 2(1), pages 1-19.
  • Handle: RePEc:wly:agribz:v:2:y:1986:i:1:p:1-19
    DOI: 10.1002/1520-6297(198621)2:1<1::AID-AGR2720020102>3.0.CO;2-0

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    References listed on IDEAS

    1. Meade, James E, 1972. "The Theory of Labour-Managed Firms and of Profit Sharing," Economic Journal, Royal Economic Society, vol. 82(325), pages 402-428, Supplemen.
    2. R. Carson, 1977. "A Theory of Co-operatives," Canadian Journal of Economics, Canadian Economics Association, vol. 10(4), pages 565-589, November.
    3. Pinhas Zusman, 1982. "Group Choice in an Agricultural Marketing Co-operative," Canadian Journal of Economics, Canadian Economics Association, vol. 15(2), pages 220-234, May.
    4. Jensen, Michael C & Meckling, William H, 1979. "Rights and Production Functions: An Application to Labor-managed Firms and Codetermination," The Journal of Business, University of Chicago Press, vol. 52(4), pages 469-506, October.
    5. Bonin, John P, 1984. "Membership and Employment in an Egalitarian Cooperative," Economica, London School of Economics and Political Science, vol. 51(23), pages 295-305, August.
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    Cited by:

    1. Han, Saim Woo, 1992. "A production and pricing decision model for the Korean agricultural cooperatives," ISU General Staff Papers 1992010108000010995, Iowa State University, Department of Economics.
    2. Royer, Jeffrey S. & Bhuyan, Sanjib, 1993. "Formula Price Contracts as an Alternative to Forward Integration by Farmer Cooperatives," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 8.
    3. George Hendrikse & Li Feng, 2013. "Interfirm cooperatives," Chapters,in: Handbook of Economic Organization, chapter 26 Edward Elgar Publishing.
    4. Hailu, Getu & Goddard, Ellen W. & Jeffrey, Scott R., 2005. "Do Decision Makers' Debt-risk Attitudes Affect the Agency Costs of Debt?," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 06.
    5. Royer, Jeffrey S., 2012. "Implications of the Cooperative Organizational Form for Vertical Expansion," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 40(2).
    6. Cook, Michael L., 1994. "The Role of Management Behavior in Agricultural Cooperatives," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 9.

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