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The Performance Of Agricultural Marketing Cooperatives In Differentiated Product Markets

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  • Ronald W. COTTERILL

Abstract

Recent empirical work suggests that cooperative presence in differentiated product markets lowers the consumer prices of all brands. This paper focuses on the theoretical basis for this competitive yardstick effect by cooperatives. It identifies two market structures where the competitive yardstick theorem for cooperatives can be extended from farmer-first handler markets to differentiated consumer product markets. They are (1) oligopoly with significant barriers to entry and (2) monopolistic competition with entry but only non-price competition. In the latter, the cooperative can also ensure that the socially optimal number of brands (product variety) is provided by the industry. The theory also provides useful guidance for determining when supply-limiting conduct in differentiated product markets should be challenged as undue price enhancement under the Capper-Volstead law.
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  • Ronald W. COTTERILL, 1997. "The Performance Of Agricultural Marketing Cooperatives In Differentiated Product Markets," Department of Resource Economics Regional Research Project 964, University of Massachusetts.
    • Handle: RePEc:wop:marerp:964
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    References listed on IDEAS

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    9. Cotterill, Ronald W. & Haller, Lawrence E., 1994. "Market Strategies in Branded Dairy Product Markets," Research Reports 25149, University of Connecticut, Food Marketing Policy Center.
    10. Ronald W. Cotterill & Andrew W. Franklin & Li Yu Ma, 1996. "Measuring Market Power Effects in Differentiated Product Industries: An Application to the Soft Drink Industry," Food Marketing Policy Center Research Reports 032, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
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    Cited by:

    1. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 3847, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Qiao Liang & Xinxin Wang, 2020. "Cooperatives as competitive yardstick in the hog industry?—Evidence from China," Agribusiness, John Wiley & Sons, Ltd., vol. 36(1), pages 127-145, January.
    3. Malvido Perez Carletti Agustina & Hanisch Markus & Rommel Jens & Fulton Murray, 2018. "Farm Gate Prices for Non-Varietal Wine in Argentina: A Multilevel Comparison of the Prices Paid by Cooperatives and Investor-Oriented Firms," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-14, January.
    4. Noel, Jay E. & Ahern, James & Schaffner, David J. & Johnson, Jill & Muelrath, Kristina & Schroeder, Kyle, 2002. "The Economic Feasibility of Forming a California Wheat Growers’ Cooperative," Research Reports 143136, University of California, Davis, Center for Cooperatives.
    5. Kumse, Kaittisak & Suzuki, Nobuhiro & Sato, Takeshi & Demont, Matty, 2021. "The spillover effect of direct competition between marketing cooperatives and private intermediaries: Evidence from the Thai rice value chain," Food Policy, Elsevier, vol. 101(C).
    6. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 18942, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Rafat A. M. E. Soboh & Alfons Oude Lansink & Gerard Giesen & Gert van Dijk, 2009. "Performance Measurement of the Agricultural Marketing Cooperatives: The Gap between Theory and Practice," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 446-469.
    8. repec:vuw:vuwscr:18942 is not listed on IDEAS
    9. Richard T. Rogers, 2001. "Structural change in U.S. food manufacturing, 1958-1997," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 3-32.
    10. Royer, Jeffrey S., 2014. "The Neoclassical Theory of Cooperatives: Part II," Journal of Cooperatives, NCERA-210, vol. 28, pages 1-17.
    11. De Carvalho Reis Neves, Mateus & Freitas, Carlos Otavio & De Figueiredo Silva, Felipe & Braga, Marcelo J. & Costa, Davi M., 2021. "The effect of marketing through cooperatives on income distribution in Brazil," 2021 Annual Meeting, August 1-3, Austin, Texas 314007, Agricultural and Applied Economics Association.

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