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Cooperatives have a difficult problem in acquiring equity capital because the residual claimant (benefactor) is the patron of the firm, not the investor. This leads to cooperative investment problems described in this paper: a) the free rider problem, b) the horizon problem, and c) the portfolio problem. Empirical analysis utilizing a latent variable structural equation model and a large dual response survey suggests that member-patrons are more likely to invest in cooperatives which adopt well defined property rights policies and structures than traditional cooperatives characterized by ill-defined property right structures.
Organic farming has grown rapidly in the European Union (EU) due to
a rising demand for high-quality food, increased environmental concerns and
market developments that led to the implementation of an organic policy and the
creation of a positive institutional framework. Nevertheless, the production of
organic fruit, including cherries, is still limited within the EU, despite high
demand. Farmers generally adopt organic farming systems only if the support
provided by the existing policy regime outweighs the increased risk and uncertainty.
This study explores the effectiveness of current policy measures for the production of
organic cherries in Greece using a real options methodology. The results reveal that
the economic incentives provided by the existing policy regime contribute to
profitability and compensate for the risk and uncertainty that organic cherry
farmers face, although further institutional support is still needed.
This paper addresses the issue of whether nontraditional agricul- tural cooperatives should be eligible for receiving public policy support. We adopt an organizational economics approach that appears to better inform policy design and suggest critical questions that both policy makers and regulators need to address before introducing measures and sanctions. After discussing the introduction of innovative cooperative models characterized by a whole new set of ownership and control rights, we recast vaguely defined property rights problems as attempts to maximize efficiency and avoid organizational decline rather than to take advantage of excessive market power in highly concentrated oligopsonistic/oligopolistic markets.