| Abstract |
A model of a three-stage vertical market structure consisting of agricultural
producers, an assembler, and a processor is developed to analyze the market
incentives farmer cooperatives may have for integrating forward into processing
activities and to evaluate the comparative impacts of cooperative forward
integration on producers and consumers. Although forward integration by
cooperatives generally provides benefits to both producers and consumers
under fixed-proportions processing technology and constant assembly and
processing costs, the existence of an integration incentive appears to
depend upon the ability of the cooperative to restrict the raw product
output of its producers to optimal levels. |
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