Cooperative pricing and scale efficiency: The case of Korean rice processing complexes

Unlike most investor‐owned enterprises, cooperatives often have freedom to choose among a variety of firm objectives. Using 2002–2008 plant‐ and province‐level data, we ask in the present article which of several alternative maximands a Korean cooperative rice processing firm pursues. In contrast to...

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Bibliographic Details
Published inAgricultural economics Vol. 44; no. 3; pp. 309 - 321
Main Authors Yoo, Chun-Kwon, Buccola, Steven, Gopinath, Munisamy
Format Journal Article
LanguageEnglish
Published Malden Blackwell Publishing Ltd 01.05.2013
Wiley Subscription Services, Inc
Subjects
Cooperatives
Efficiency
Firm objectives
L21
L25
L31
Pricing efficiency
Q13
Scale efficiency
Studies
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Summary:Unlike most investor‐owned enterprises, cooperatives often have freedom to choose among a variety of firm objectives. Using 2002–2008 plant‐ and province‐level data, we ask in the present article which of several alternative maximands a Korean cooperative rice processing firm pursues. In contrast to earlier studies, farmer‐member supply functions are incorporated into the cooperative's optimization framework. We show that only large cooperative firms have operated at efficient scale, while small and medium‐sized ones have been scale‐inefficient. Because the latter operate where scale returns are increasing, mergers of small and medium‐sized cooperatives likely would be cost‐reducing and member‐return‐enhancing.
Bibliography:ark:/67375/WNG-KPTWM2FT-L
istex:18C1336D94ACB332944EFCA1C65FBF547E157A31
ArticleID:AGEC12013
The views expressed here are those of the author(s), and may not be attributed to the Economic Research Service or the U.S. Department of Agriculture. Data used in this study are proprietary. Researchers wishing to test or replicate results presented in the article should contact the authors, who will extend their best efforts to help secure access to the data from Korea's National Agricultural Cooperative Federation.
ISSN:0169-5150
1574-0862
DOI:10.1111/agec.12013