On the Coexistence of Spot and Contract Markets: a Delivery Requirement Explanation

A model is presented in which spot and contract market exchange co-exist. A contract consists of a delivery requirement between an upstream and a downstream party. Contract formation determines to a certain extent the probability distribution of the spot market price. This contract formation externality entails the removal of high reservation price buyers and various sellers from the spot market. The first effect decreases the expected spot market price when the number of contracts is small, whereas the decrease in the number of sellers and additional residual contract demand increase the expected spot market price beyond a certain number of contracts. It implies an endogenous upper bound on the number of contracts. Contract prices are positively related to the number of contracts. Finally, additional contracts reduce the variance of the spot market price when the number of contracts is sufficiently large.Spot market, contract externality, co-existence, delivery requirement, Marketing, D40, L10,

Grower Heterogeneity and Governance: Authority, Access, and Countervailing Power

The increasing differentiation on the supply side of agricultural and horticultural markets has resulted in many governance structure changes between growers and wholesalers. For example, marketing cooperatives are restructured, heterogeneous associations split up in various one-product associations, growers integrate forward into wholesaling, and so on. These developments are analysed with an incomplete contracting model addressing horizontal as well as vertical relationships in a multilateral setting. The interactions between authority, access, and countervailing power in the choice of governance structure are highlighted.Industrial Organization,

Competing Screening Rules

Various studies show that agricultural cooperatives behave differently than their investor-owned counterparts. One explanation may be that the internal decision making process differs in these two governance structures. A model is developed to explore how endogenous screening rules affect efficient organizational choices and industrial structures. It is shown that screening level choice may outweigh architecture choice and that screening rules are strategic substitutes. Conditions are derived under which cooperatives are efficient organizational forms. It is also shown that competition may increase the attractiveness of investor-owned firms and circumstances are determined in which cooperatives and investor owned firms coexist in equilibrium.architecture, screening, cooperatives, duopoly, Agribusiness, Q13,

Coordination and Governance: The case of Cooperatives versus IOFs

Agribusiness,

Collective action of small farmers: A case study of Ruoheng farmer watermelon cooperative in China

Watermelon production investments, incomes and the access to markets between members of a cooperative and individual small farmers are compared. The results of the case study regarding members of a watermelon cooperative and five individual small farmers in Zhejiang province in China indicate that members of the cooperative are prone to produce food of higher quality, have obvious advantage in accessing modern food supply chains over individual small farmers, and subsequently gain a significantly higher return or income than individual small farmers.farmer cooperative, benefit, income, Consumer/Household Economics,

Organization and Strategy of Farmer Specialized Cooperatives in China

A description and analysis of China's Farmer Specialized Cooperatives is presented. Data is presented regarding the historical development of farmer cooperatives in China, the membership composition of a sample of 66 farmer cooperatives in the Zhejiang province, and the various attributes (governance, quality control system, and strategy) of a watermelon cooperative in this province. Many cooperatives are being transformed in organizations with a market orientation. These cooperatives exhibit substantial heterogeneity, in terms of farmers being member and skewness in the distribution of control rights. Human asset specificity in terms of establishing and maintaining relations and access to markets seems to be more important than physical asset specificity in accounting for governance structure choice in the current institutional setting.Farmer Cooperative, China, Governance Structure, Business Strategy, Agribusiness, Q13,

Grower Heterogeneity and Governance: Authority, Access, and Countervailing Power

The increasing differentiation on the supply side of agricultural and horticultural markets has resulted in many governance structure changes between growers and wholesalers. For example, marketing cooperatives are restructured, heterogeneous associations split up in various one-product associations, growers integrate forward into wholesaling, and so on. These developments are analysed with an incomplete contracting model addressing horizontal as well as vertical relationships in a multilateral setting. The interactions between authority, access, and countervailing power in the choice of governance structure are highlighted

On the Coexistence of Spot and Contract Markets: a Delivery Requirement Explanation

A model is presented in which spot and contract market exchange co-exist. A contract consists of a delivery requirement between an upstream and a downstream party. Contract formation determines to a certain extent the probability distribution of the spot market price. This contract formation externality entails the removal of high reservation price buyers and various sellers from the spot market. The first effect decreases the expected spot market price when the number of contracts is small, whereas the decrease in the number of sellers and additional residual contract demand increase the expected spot market price beyond a certain number of contracts. It implies an endogenous upper bound on the number of contracts. Contract prices are positively related to the number of contracts. Finally, additional contracts reduce the variance of the spot market price when the number of contracts is sufficiently large

CEO Compensation in Cooperatives versus Publicly Listed Firms

A multiple activities principal-agent model regarding CEO compensation in cooperatives is presented, capturing that cooperatives are not publicly listed and that they have to bring the enterprise to value as well as to serve member interests. A cooperative dominates a publicly listed firm in terms of efficiency when either activities are sufficiently complementary, or additional information is considered in the performance measure