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One cow, one vote?

Author

Listed:
  • Svend Albæk

    (Institute of Economics, University of Copenhagen)

  • Christian Schultz

    (Institute of Economics, University of Copenhagen)

Abstract

This paper considers investment decisions in a farmers' cooperative. Farmers sell their products through the cooperative. Before production takes place the cooperative has to decide on an investment. This is done by a vote in which each farmer has one vote, regardless of economic size. The paper asks whether this leads to efficient investment decisions. The answer depends on how the cost of the investment is distributed among the farmers. The main result of the paper is that if the cost is paid out of retained earnings, the investment decision of a large cooperative will be approximately efficient.

Suggested Citation

  • Svend Albæk & Christian Schultz, 1997. "One cow, one vote?," CIE Discussion Papers 1997-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:1997-01
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    References listed on IDEAS

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    1. Helpman Elhanan & Persson Torsten, 2001. "Lobbying and Legislative Bargaining," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-33, November.
    2. Persson, Torsten, 1998. "Economic Policy and Special Interest Politics," Economic Journal, Royal Economic Society, vol. 108(447), pages 310-327, March.
    3. Laffont, J.-J., 1999. "Political Economy, Information and Incentives," Papers 99.516, Toulouse - GREMAQ.
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    5. repec:cup:apsrev:v:92:y:1998:i:04:p:809-827_21 is not listed on IDEAS
    6. Stratmann, Thomas, 1992. "Are Contributions Rational? Untangling Strategies of Political Action Committees," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 647-664, June.
    7. repec:cup:apsrev:v:89:y:1995:i:03:p:566-581_09 is not listed on IDEAS
    8. repec:cup:apsrev:v:90:y:1996:i:02:p:303-315_20 is not listed on IDEAS
    9. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-664, August.
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    Citations

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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, pages 56-71.
    2. Olimov, Jafar, 2014. "Cooperatives and the Risk Aversion of Farmers," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170833, Agricultural and Applied Economics Association.
    3. Maxime Agbo & Damien Rousselière & Julien Salanié, 2013. "A theory of agricultural marketing cooperatives with direct selling," Post-Print halshs-00949726, HAL.
    4. Liang, Qiao & Hendrikse, George W. J. & Huang, Zuhui, 2010. "Value added and governance structure: Evidence from the pear industry in China's Zhejiang province," IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance 52708, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    5. Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," NBER Working Papers 6421, National Bureau of Economic Research, Inc.
    6. Roma, Paolo & Perrone, Giovanni, 2016. "Cooperation among competitors: A comparison of cost-sharing mechanisms," International Journal of Production Economics, Elsevier, vol. 180(C), pages 172-182.
    7. Ma, Meilin & Zhu, Heng, 2014. "Decision Making Among Heterogeneous Members: A Study on Economic Efficiency under the Centralized Structure of Chinese Farmer Professional Cooperatives," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 168366, Agricultural and Applied Economics Association.
    8. Kyriakos Kyriakopoulos & Matthew Meulenberg & Jerker Nilsson, 2004. "The impact of cooperative structure and firm culture on market orientation and performance," Agribusiness, John Wiley & Sons, Ltd., vol. 20(4), pages 379-396.
    9. Bontems, Philippe & Fulton, Murray, 2009. "Organizational structure, redistribution and the endogeneity of cost: Cooperatives, investor-owned firms and the cost of procurement," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 322-343, October.
    10. repec:hal:journl:halshs-01098762 is not listed on IDEAS

    More about this item

    JEL classification:

    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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