Cooperative formation and financial contracting in agricultural markets. Paper presented at American Agricultural Economics Association Annual Meeting

Abstract. We use historical variation in the market share of agricultural cooperatives to examine the nature of the cooperative rm. Our data in-clude the share of sectoral output accounted for by cooperative rms across 15 commodity sectors during the period 1930-2002. We test a simple nan-cial contracting model where the cooperative rm is viewed as a particu-lar implementation of \monitored credit " (or \informed intermediation"). Controlling for sectoral and year eects, we nd support for the main pre-diction of our model with a positive and statistically signicant relationship between cooperative market share and real annual lending rates. 1