Cooperatives compete in farm-supply and marketing industries with investor-owned enterprises. Cooperatives' shares should depend on their distinctive organization: dealing “at cost” with members whose equities are tied to their current transactions with the cooperative. We show how this ownership structure affects cooperatives' activities and investment decisions, how it interacts with the public policies affording cooperatives special tax and antitrust status, and what these factors together imply for cooperatives' market shares and the extent of their vertical integration. Available data permit only informal tests of these predictions, but the evidence seems to confirm them strongly.
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Caves et al. (1986) studied this question.
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