The Formation of Cooperatives: A Game-Theoretic Approach with Implications for Cooperative Finance, Decision Making, and Stability

Richard J. Sexton

American Journal of Agricultural Economics, 1986, vol. 68, issue 2, 214-225

Abstract: This paper departs from the traditional organization-oriented approach to cooperative analysis. It exploits cooperation's functional similarity to vertical integration to examine individuals' incentives to form cooperatives. A model of formation of a purchasing cooperative is presented and developed as an n-person game with the core as a solution concept. Core existence is examined for both single- and multiple-cooperative configurations, and cooperative finance methods are examined relative to finding core-compatible allocation rules. The results provide insight into a cooperative's equilibrium output, stability, decision making, financing methods, and choice of open or restricted membership.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:68:y:1986:i:2:p:214-225.

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