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Quality provision and governance structure variety: Pooling versus double markup

Author

Listed:
  • Liang, Qiao
  • Hendrikse, George W. J.
  • Huang, Zuhui

Abstract

This paper examines how farmers producing differentiated quality products choose different governance structures in a non-cooperative game between farmers, enterprises, and consumers. A cooperative and an IOF (investor owned firm) coexist in equilibrium and low quality is delivered by the cooperative. The trade-off between pooling and the elimination of the double markup determines the attractiveness of cooperatives compared to IOFs.

Suggested Citation

  • Liang, Qiao & Hendrikse, George W. J. & Huang, Zuhui, 2010. "Quality provision and governance structure variety: Pooling versus double markup," IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance 52694, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    • Handle: RePEc:zbw:iamo10:52694
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    References listed on IDEAS

    as
    1. Deepananda Herath & Zuhair Hassan & Spencer Henson, 2007. "Adoption of Food Safety and Quality Controls: Do Firm Characteristics Matter? Evidence from the Canadian Food Processing Sector," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 55(3), pages 299-314, September.
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    3. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    4. Zhou, Jiehong & Jin, Shaosheng, 2009. "Adoption of Food Safety and Quality Standards by China’s Agricultural Cooperatives: A Way out of Monitoring Production Practices of Numerous Small-scale Farmers ?," 2009 Conference, August 16-22, 2009, Beijing, China 50293, International Association of Agricultural Economists.
    5. John M. Antle, 1999. "The New Economics of Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 993-1010.
    6. Patrick HERBST & Jens PRUFER, 2016. "Firms, Nonprofits, And Cooperatives: A Theory Of Organizational Choice," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 315-343, December.
    7. Pradeep Dubey & John Geanakoplos, 2002. "Competitive Pooling: Rothschild-Stiglitz Reconsidered," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1529-1570.
    8. 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.
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    More about this item

    Keywords

    Quality; Cooperatives; Investor-Owned Firms;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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