Patronage Refunds, Producer Expectations and Optimal Pricing by Agricultural Cooperatives

This paper presents a dynamic model of a processing cooperative in which patronage refunds are taken into consideration by producers in making marketing decisions and by the cooperative in establishing pricing strategies. An adaptive expectations framework is used to represent the formation of producer expectations of patronage refunds. The model suggests that cooperatives can successfully distribute earnings to producers as patronage refunds while using prices as instruments for achieving and maintaining optimal output levels. This result challenges conventional ideas about cooperative market behavior and implies that public support for cooperatives should be based on empirical analysis rather than theoretical arguments alone.


Subject(s):
Issue Date:
2007
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/46577
Published in:
Journal of Cooperatives, Volume 20
Page range:
1-16
Total Pages:
18




 Record created 2017-04-01, last modified 2017-08-25

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