Jul 14, 2012

Cooperatives - somer recent literature

Cooperatives look to promote economic development. They are based on the assumption that a group of people working together can produce more than the addition of the production of each individual working separately - cooperatives can generate economies of scale: 2 + 2 = 5. The basic economic challenge that cooperatives face is a collective action problem, which depends on the generation and existence of institutions (rules) that allow to solve the free riding problem (see here.). Elinor Ostrom's work deals precisely with the ways in which individuals try to solve collective action problems (see here). 

The research on cooperatives consists mainly of case studies, which are context dependent. Cooperatives work well in some countries or regions but not so well in others. I have not seen a cross country study of cooperatives. There are some recent trends in the literature, however: 

1) Cooperatives are more prevalent in regions of high unemployment (see here).
2) Cooperatives are an important source of innovation (see here), sometimes even when compared with private enterprises (see here). 
3) Cooperatives can increase the bargaining power of producers (see here).
4) Ethnic and religious identity usually contributes to long term survival of cooperatives (see here). 

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