An information economic rationale for cooperatives

Peter Bogetoft

European Review of Agricultural Economics, 2005, vol. 32, issue 2, 191-217

Abstract: We consider how to organise the processing and marketing of an agricultural product when farming costs are known only by the individual farmers. We show that when marginal costs are uncorrelated, the market for final goods is competitive, and the market for processing is non-competitive, the socially optimal production levels are sustained by a cooperative and a cooperative only. We show also that the cooperative form is particularly useful when the cost uncertainty is large and the net average revenue product is small. Copyright 2005, Oxford University Press.

Date: 2005
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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