SEARCH

SEARCH BY CITATION

Keywords:

  • L21;
  • L25;
  • L31;
  • Q13;
  • Cooperatives;
  • Firm objectives;
  • Pricing efficiency;
  • Scale efficiency

Abstract

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.