Influence Costs in Heterogeneous Cooperatives: A Formal Model of Sales Distortion.

Modern agricultural marketing cooperatives must implement farm-level differentiation to meet requirements from high-quality market segments, e.g. consumers focusing on animal welfare. This makes the cooperatives internally heterogeneous and increases the influence costs. In particular, the marketing of special high-quality products is a controversial issue for cooperatives, because different producer groups have different interests. The standard producers, who normally hold the majority vote in the cooperatives, are reluctant to promote the sale of specialty products and hereby increase the bargaining power of the specialty producers. We explore these arguments in a formal model.