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Abstract
China’s new cooperatives law took effect in 2007 and resulted in rapid
growth in the number of agricultural cooperatives in China. This raises
questions about appropriate strategies for growth such as whether or not
cooperatives experience economies of scale as they grow. This study
examines economies of scale in farmer cooperatives in Shanxi Province; the
province that had the fastest growth in the number of agricultural
cooperatives in China during 2008-2010. The results indicate that all
cooperatives in the sample grew rapidly in their number of members and
value of assets between 2008 and 2010. Large cooperatives are found to
have an advantage over small cooperatives in terms of economies of scale.
The results indicate that when a strategy couples growth with specialization
it tends to improve the competitive position of these cooperatives.