Strategic Entry of Farmers’ Cooperatives in Agricultural Markets

Abstract

Problem definition: In agricultural markets, farmers often face powerful investor-owned firms (IOFs) that dominate marketing and impose pricing pressure at the farm-gate. To counter this, farmers can form cooperatives (co-ops), which differ from IOFs in their objectives and transaction dynamics, to collectively enter the market. Although co-ops can be established with different membership structures, the impact of their potential market entry remains unclear, as does the question of which co-op type is more likely to succeed and perform better. Methodology/results: We propose a two-stage game-theoretical model to examine farmers’ strategic responses to a dominant IOF through the formation of..