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Abstract

Consolidation has been a trend among local cooperatives for most of the past century. Earlier studies show that these cooperatives face size-related economies and that consolidation is to be expected as cooperatives seek to improve their efficiency and competitiveness. In this article we revisit the question using data from 377 local cooperative associations in operation during the 1990s. Methods involve using nonparametric cost frontiers that enable us to distinguish the effects of scale inefficiency from other production inefficiencies. Our results suggest that many local cooperatives are at or near an efficient scale of operation.

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