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Abstract

The paper develops an analytical framework of estimating the magnitude of transaction costs on the basis of previous related studies and the specific trade characteristic of apple growers in orthwestern China. The investigation results present that the cooperative growers can averagely save 884.59 yuan of transaction costs compared with conventional growers. The empirical results conducted by a Tobit model demonstrate statistically significance of grower’s off-farm experience, degree of trust in cooperatives, apple farm size, and various transaction costs variables on the proportion of selling products through cooperatives. The policy considerations mainly concentrate on upgrading cooperative information service ability, establishing contractual framework, and developing support programs on road construction.

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