Abstract

Delivery rights to a cooperative's marketing pool can take on a value independent of the members' equity share under certain conditions. Based on anecdotal information, transferable delivery rights become valuable when the pool is fixed in size (closed), members are protected from exploitation of quasi economic rents, and have an assured "home" for their production. The greater the potential buyers' aversion to risk, the higher the value of the delivery right. The right has additional value if the cooperative generates a premium per unit return due to product differentiation and market power. Cooperatives competing with investor-owned firms in less than purely competitive markets must be able to pay equal net returns to members if they are to survive.

Disciplines

Agribusiness | Agricultural and Resource Economics | Business

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URL: http://digitalcommons.calpoly.edu/agb_fac/54