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| Pennerstorfer, Dieter; Weiss, Christoph R.. |
| The present paper investigates the free-riding problem in determining product quality within cooperatives in a vertically related market. Whereas the individual member has to bear all costs associated with higher quality, the benefits of delivering higher quality have to be shared among all members. On the basis of a Mixed-Oligopoly model, we show that the free-rider problem in the supply of high-quality products, although important for the members of the cooperative, may not be strong enough to ensure that firms will always supply higher quality than cooperatives. Whether the cooperative can overcome the free-riding problem and supply a final product of high quality is shown to depend on the consumer's valuation of quality, the costs of producing high... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agribusiness. |
| Ano: 2007 |
URL: http://purl.umn.edu/9403 |
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| Pennerstorfer, Dieter; Weiss, Christoph R.. |
| We investigate the impact of decentralised decision making on product quality. Comparing a cooperative (decentralized decision making) and a firm (centralized decision making) suggests that members of the cooperative have an incentive to produce too much and to free-ride on quality. Free-riding on quantity and quality are interrelated which implies that the final product of the cooperative can even be of higher quality than its entrepreneurial twin, despite free-riding on quality. Whether or not cooperatives deliver higher quality products depends on the way in which the quality of the final product is determined from the quality levels of the inputs delivered (quality aggregation) as well as the number of members of the cooperative. Empirical evidence on... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agribusiness. |
| Ano: 2011 |
URL: http://purl.umn.edu/115741 |
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