Toward an economics of the rural third sector

Third sector organisations play a prominent role in rural development. Yet, such organisations have been largely neglected by existing economic research. This paper examines the potential role of standard theories of the third sector and collective action in explaining the motivations to form such organisations in rural settings. In doing so the paper outlines a research program on the economic theory of the rural third sector. It is argued that some rural third sector organisations emerge for reasons emanating from unique aspects of agriculture and rurality. Some of these reasons are related to rural areas' characteristics that reduce the return on for-profit firms' investment. Other reasons emerge from the need to overcome the organisational disadvantages of small-scale family farms, and the call for maintaining the balanced multifunctional character of agriculture. Illustrative examples from three European countries provide preliminary support to our arguments.rurality, agriculture, governance, rural third sector, rural development, economic theory, family farms, small farms, small-scale farms,