THE PRODUCTIVE EFFICIENCY OF UNITED-STATES MILK PROCESSING COOPERATIVES

While co-operative organisations fare well in agricultural markets in the United States, this paper argues that co-operatives are theoretically an inherently inferior form of organisation. Empirically, we apply a nonparametric frontier production model to a sample of co-operative and non-co-operative US fluid-milk processors to determine the relative productive efficiency of these two forms of organisation. Our empirical results support the hypothesis that US milk processing co-operatives are less efficient than their proprietary counterparts.