Sales Distortion In Heterogeneous Cooperatives

Peter Bogetoft and Henrik Ballebye Olesen
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Henrik Ballebye Olesen: Copenhagen Economics

Chapter Chapter 12 in Vertical Markets and Cooperative Hierarchies, 2007, pp 213-223 from Springer

Abstract: Abstract We show that the internal conflicts in cooperatives can distort sales and reduce the marketing of high-quality products. The conflicts arise because modern agricultural marketing cooperatives must implement farm-level differentiation to meet requirements from high-quality market segments, e.g. consumers focusing on animal welfare. When standard producers hold the majority vote in the cooperatives, they are reluctant to promote the sales of specialty products to first best levels even though this does not affect the sales of standard products. The cooperatives will therefore tend to under-produce specialty products.

Keywords: Production Level; Standard Producer; Price Premium; Payment Scheme; Marginal Revenue (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-1-4020-5543-0_12

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DOI: 10.1007/1-4020-5543-0_12

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