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Corruption in agricultural processing firms: A comparison of cooperatives and investor‐owned firms

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  • Murray E. Fulton
  • Konstantinos Giannakas

Abstract

This paper examines managerial corruption in cooperatives (co‐ops) and investor‐owned firms (IOFs), including its impact on prices and farmer welfare. Even when co‐op managers have greater incentives to engage in corruption because of the co‐op's larger production, the resulting corruption is not sufficient to offset the competitive effect that co‐ops exert vis‐à‐vis IOFs. This conclusion holds regardless of the functional form of the production function, the farm input supply curve, and the demand curve for the processed product. In addition to showing the robustness of the competition effect, the paper provides a highly flexible modeling framework that can be used to examine other co‐op behavior questions. Cet article examine la corruption managériale dans les coopératives (coop) et les entreprises appartenant à des investisseurs (EAI), y compris son impact sur les prix et le bien‐être des agriculteurs. Même lorsque les gestionnaires de coops sont davantage incités à se livrer à la corruption en raison de la production plus importante de la coop, la corruption qui en résulte n'est pas suffisante pour compenser l'effet concurrentiel que les coops exercent vis‐à‐vis des EAI. Cette conclusion est valable, quelle que soit la forme fonctionnelle de la fonction de production, la courbe d'offre d'intrants agricoles et la courbe de demande pour le produit transformé. En plus de montrer la robustesse de l'effet de concurrence, le document fournit un cadre de modélisation très flexible qui peut être utilisé pour examiner d'autres questions concernant le comportement des coops.

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  • Murray E. Fulton & Konstantinos Giannakas, 2020. "Corruption in agricultural processing firms: A comparison of cooperatives and investor‐owned firms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(4), pages 445-460, December.
    • Handle: RePEc:bla:canjag:v:68:y:2020:i:4:p:445-460
    DOI: 10.1111/cjag.12254
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