THE EFFECT OF COOPERATIVES ON PRODUCT INNOVATION IN THE AGRI-FOOD SYSTEM

Kyriakos Drivas and Konstantinos Giannakas ()

No 21223, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper develops a game-theoretic model of heterogeneous consumers to analyze the effect of cooperative involvement on quality-enhancing product innovation activity, the pricing of food products, and the welfare of the groups involved in the context of a mixed duopoly where an openmembership consumer co-op competes with an IOF. Analytical results show that the involvement of the member welfare-maximizing co-op in R&D can be quality and welfare enhancing by increasing the arrival rate of product innovations and reducing the prices of food products. The effectiveness of the coop is shown to depend on the nature of product differentiation and the relative quality of its products, the degree of consumer heterogeneity, and the size of innovation costs.

Keywords: Agribusiness (search for similar items in EconPapers)
Pages: 42
Date: 2006
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21223

DOI: 10.22004/ag.econ.21223

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