University of Wisconsin Center for Cooperatives
Journal of Agricultural Cooperation

Title Guaranteeing a Market and the Contracts of Bargaining Cooperatives
Author(s) Charles R. Knoeber and David L. Baumer
Series Volume 1
Issue Date 1986
Abstract One important function of bargaining cooperatives is alleged to be guaranteeing a market for their members. We characterize this function as deterring opportunistic behavior by producers and processors operating under forward contracts. We then examine actual contracts of bargaining cooperatives and argue that certain clauses in these contracts serve to guarantee the market. These clauses are those that provide for mechanical or third-party grading, liquidated damages, and most-favored-customer treatment.

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