The economic efficiency of Irish dairy marketing co‐operatives

This paper is concerned with an empirical test for the economic efficiency of Irish dairy marketing co‐operatives. The paper develops a test for the pricing behavior of dairy marketing co‐operatives based on previous work by R.J. Sexton, B.M. Wilson, and J.J. Wann (1989) and K. Conrad and R. Unger (1987). The proposed test is implemented with data for the Irish dairy‐processing sector. The findings suggest that Irish co‐operatives behaved “as if” they were profit maximizers, and we could find no evidence that this behavior coincided with postulated co‐operative pricing rules. We conclude the paper with a discussion of the economic impact of the EU dairy quota on the Irish dairy‐processing sector. We also discuss the emergence of Public Limited Companies (PLCs) as the dominant organizational structure in the Irish dairy sector. [JEL citations: D21; Q13.]