Cooperatives, Regulation and Competition in Norwegian Agriculture

Over production is a persistent and costly problem in Norwegian agriculture. Support to agricultural production implicitly yields incentives to produce too much, i.e., causing market prices to fall below the target level, and thereby increasing the need for subsidies and additional market interventions. In order to restrict supplies, farmers are allowed to coordinate through marketing cooperatives. The paper argues that this coordination is likely to be insufficient in markets where the cooperative competes with an investor-owned wholesaler. Interventions in the market in order to remove excess supplies may induce further incentives to increase production. Levying a tax on all production in order to cover market regulation costs, moves the solution in the right direction but is impotent in restoring the target (second-best) level of production.


Subject(s):
Issue Date:
2002
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/24907
Total Pages:
16
JEL Codes:
Q13; L21; D43
Series Statement:
Contributed Paper




 Record created 2017-04-01, last modified 2017-08-24

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