Marketing Cooperatives and Financial Structure

Abstract

The relationship between the financial structure of marketing cooperatives and the requirement of the domination of control by the members of the cooperative is analysed with an emphasis on incomplete contracts and system complementarities. It is argued that the disappearance of shortage markets in agricultural and horticultural markets poses a serious threat to the survival of the marketing cooperative as an organizational form. Comparative statics results are presented regarding aspects of financial instruments (e.g. personal liability, financial contributions and bank relationships), organizational form (e.g. democratic decision making and internal control systems) and economic systems.