Game-theoretical analysis reveals how cooperatives can effectively challenge investor-owned firms in agriculture.
Key Points
This research aims to explore how farmers’ cooperatives can strategically enter agricultural markets to counteract the dominance of investor-owned firms.
Developed a two-stage game-theoretical model to analyze cooperative formation strategies.
Examined the impact of open versus closed membership structures in co-ops.
Analyzed the influence of co-op formation on farm-gate and consumer prices.
Farmers initiate co-op formation when farm-gate prices fall below a certain threshold.
The threat of co-op formation can pressure investor-owned firms to increase farm-gate prices.
Closed cooperatives gain better market access, but open cooperatives may yield higher profits for farmers.
Both farmers and consumers benefit from co-op formation through increased farm-gate prices and reduced consumer prices, unless market size is too small.