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Abstract
The agriculture in transition countries can be described by considerable uncertainties.
In these countries public institutions are ineffective in ensuring contract enforcement.
The absence of enforceable contract to set up any kind of vertical co-ordination has
become difficult. In addition, this creates severe barriers for price discovery involving
high transaction costs to co-ordinate market exchanges. Although there is a wealth of
literature on marketing cooperative, but research on their role in transition agriculture
is scarce. This paper tries to contribute to this gap. In this paper we have analysed the
potential benefits and costs of the marketing cooperatives in Hungary employing
transaction cost economics framework. The results presented add to a small literature
on the marketing cooperatives in transition agriculture. We found that the quantity,
the existence of contract, flexibility and trust are the most important factor for farmers
to selling their product via cooperative. The cluster analysis provides some additional
insights regarding farmers' choices. Namely, direct benefits including price, input
finance extension services and speed of payments from cooperative membership have
also important role. The most striking result is that the diversification and reputation
has positive influences on the share of cooperative. Furthermore, large farmers have
less willingness to sell their product to the cooperative. Surprisingly, asset specificity
has rather negative effects on the share of cooperative.