Agricultural Economics · 2013 · 12 citations · 23 references
AgricultureAgricultural EconomicsEconomicsCooperative EconomicsMergersMicroeconomicsAgricultural CooperativesAgricultural Supply Chain ManagementCooperative ManagementCooperative Performance AnalysisEconomies Of ScaleProducer CooperativesAgricultural Producer CooperativesCooperative FarmingCooperative ModelsCooperative PricingFirm PerformanceProcessing CooperativesScale EfficiencyVariable Returns To Scale
Abstract Unlike most investor‐owned enterprises, cooperatives often have freedom to choose among a variety of firm objectives. Using 2002–2008 plant‐ and province‐level data, we ask in the present article which of several alternative maximands a Korean cooperative rice processing firm pursues. In contrast to earlier studies, farmer‐member supply functions are incorporated into the cooperative's optimization framework. We show that only large cooperative firms have operated at efficient scale, while small and medium‐sized ones have been scale‐inefficient. Because the latter operate where scale returns are increasing, mergers of small and medium‐sized cooperatives likely would be cost‐reducing and member‐return‐enhancing.
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