Marketing co-operatives: An incomplete contracting perspective

Marketing co-operatives (MCs) are analysed from an incomplete contracting perspective. The requirement of the domination of control by the members of an MC is a threat to the survival of an MC in markets where the level of asset specificity at the processing stage of production is increasing. However, an MC may remain an efficient governance structure when the increasing level of asset specificity is compensated for by a sufficient increase in the extent of product differentiation.