Imperfect Competition in Agricultural Markets and the Role of Cooperatives: A Spatial Analysis

Abstract

Abstract Important characteristics of many agricultural markets are costly to transport raw products and relatively few processors, one or more of which is often a cooperative. This paper analyzes pricing behavior in these oligopsonistic, spatial markets and focuses specifically upon the conjecture that cooperatives may have a procompetitive effect on the behavior of rival non‐co‐op processors. The existence and magnitude of a procompetitive effect is shown to depend upon a number of structural and strategic factors including competitive relations among the non‐co‐op processors and a cooperative's membership and pricing policies.