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A production and pricing decision model for the Korean agricultural cooperatives

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  • Han, Saim Woo

Abstract

The purposes of this study were to introduce the idea that a farm cooperative is a decision unit in Korea, and to develop a short-run model of the cooperative which could be used to analyze its problems;In particular, an attempt was made to develop under certainty a normative-prescriptive model of a diversified multi-product marketing, supply inputs and consumption goods cooperative which served both member and nonmember patrons, and also develop a model of a multi-product marketing and supply cooperative under uncertainty;Development of the model under certainty began with the construction of a sub-model of a typical multi-product member patron. A similar sub-model of a typical nonmember patron was also developed;The cooperative decision-maker was assumed to maximize the welfare function whose elements were the individual members' indirect utility functions. The decision-maker determined the optimal prices for the products it marketed and supplied and optimal level of club goods it provided;Finally, a model of the cooperative was developed to consider the effects of price uncertainty on the objective function. The cooperative decision-maker was assumed to maximize its welfare function which is to increase the sum of individual members' expected profits, and decrease the member's risk. The optimality conditions for this model were analyzed.

Suggested Citation

  • Han, Saim Woo, 1992. "A production and pricing decision model for the Korean agricultural cooperatives," ISU General Staff Papers 1992010108000010995, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1992010108000010995
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