In many European countries, farmers are a member of a processing or marketing co-operative, and most of these farmers deliver their products to that co-operative. However, an extensive data set of Italian farmers shows that not all members deliver to their co-op, and that there are also non-members that deliver to co-ops. Using theoretical arguments from the New Institutional Economics literature, a bivariate probit model is estimated to explain co-op membership and delivery jointly. Results show that membership and delivery are indeed linked, but also that different factors influence farmers' decisions on membership and delivery.
- imperfect competition