Series/Report no.:
IAMO Forum 2010, Halle (Saale), June 16 - 18, 2010: Institutions in Transition - Challenges for New Modes of Governance
Abstract:
This paper examines how farmers producing differentiated quality products choose different governance structures in a non-cooperative game between farmers, enterprises, and consumers. A cooperative and an IOF (investor owned firm) coexist in equilibrium and low quality is delivered by the cooperative. The trade-off between pooling and the elimination of the double markup determines the attractiveness of cooperatives compared to IOFs.