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How upstream cooperatives limit downstream holdups

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  • Bogetoft, Peter

Abstract

In this paper, we consider a downstream firm negotiating with an upstream firm, and we investigate the impact of the organizational form of the upstream firm. We show that if the upstream firm is organized like a traditional cooperative, where the members have free delivery rights and where surplus is shared in proportion to the deliveries, the downstream firm is less subject to a holdup. The cooperative form makes it possible for the upstream firm to credibly commit to deliveries.

Suggested Citation

  • Bogetoft, Peter, 2021. "How upstream cooperatives limit downstream holdups," Journal of Economic Behavior & Organization, Elsevier, vol. 181(C), pages 156-168.
    • Handle: RePEc:eee:jeborg:v:181:y:2021:i:c:p:156-168
    DOI: 10.1016/j.jebo.2020.11.036
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    References listed on IDEAS

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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
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    3. Peter Bogetoft, 2005. "An information economic rationale for cooperatives," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 32(2), pages 191-217, June.
    4. Jasper GRASHUIS & Michael COOK, 2018. "An Examination Of New Generation Cooperatives In The Upper Midwest: Successes, Failures, And Limitations," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(4), pages 623-644, December.
    5. Albaek, Svend & Schultz, Christian, 1998. "On the relative advantage of cooperatives," Economics Letters, Elsevier, vol. 59(3), pages 397-401, June.
    6. Capellán-Pérez, Iñigo & Campos-Celador, Álvaro & Terés-Zubiaga, Jon, 2018. "Renewable Energy Cooperatives as an instrument towards the energy transition in Spain," Energy Policy, Elsevier, vol. 123(C), pages 215-229.
    7. Harris, Andrea & Stefanson, Brenda & Fulton, Murray E., 1996. "New Generation Cooperatives and Cooperative Theory," Journal of Cooperatives, NCERA-210, vol. 11, pages 1-15.
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    Cited by:

    1. Hamada, Kojun, 2023. "Organizational structure and technological investment revisited: An explanation based on the property rights approach," Research in Economics, Elsevier, vol. 77(3), pages 390-401.

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    More about this item

    Keywords

    Cooperative; Volume control; Holdup;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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