Ill-Defined Property Rights in Collective Action: The Case of US Agricultural Cooperatives.

Authors:
Menard, Claude
Cook, Michael Lee
Dr Constantine Iliopoulos
Type: Journal Article
Journal title: Perspectives from New Institutional Economics, Edward Elgar
Year of publication: 2000
Source: AGRERI
Subject:
policies
agricultural policies
agricultural development
agricultural economics
cooperatives
agribusiness and cooperatives
Description:

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.

 

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