One cow, one vote?

This paper considers investment decisions in a farmers' cooperative. Farmers sell their products through the cooperative. Before production takes place the cooperative has to decide on an investment. This is done by a vote in which each farmer has one vote, regardless of economic size. The paper asks whether this leads to efficient investment decisions. The answer depends on how the cost of the investment is distributed among the farmers. The main result of the paper is that if the cost is paid out of retained earnings, the investment decision of a large cooperative will be approximately efficient.