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An Information Economic Rationale for Cooperatives

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  • Boetoft, Peter

Abstract

We consider how to organize 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 un-correlated, the market for nal 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.

Suggested Citation

  • Boetoft, Peter, 2005. "An Information Economic Rationale for Cooperatives," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24476, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae05:24476
    DOI: 10.22004/ag.econ.24476
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    References listed on IDEAS

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    1. Antle, Rick & Bogetoft, Peter & Stark, Andrew W., 2001. "Information systems, incentives and the timing of investments," Journal of Accounting and Public Policy, Elsevier, vol. 20(4-5), pages 267-294.
    2. Albaek, Svend & Schultz, Christian, 1998. "On the relative advantage of cooperatives," Economics Letters, Elsevier, vol. 59(3), pages 397-401, June.
    3. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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