Market Shares of Agricultural Cooperatives Across Sectors and Countries in the European Union

Abstract: Theoretical predictions regarding the market shares of cooperatives seem to be at odds with empirical evidence. It appears that cooperative market shares are higher in sectors where large value is added at the downstream level and in countries with strong contracting institutions. We test a number of theoretical predictions regarding the degree of forward vertical integration by using the data on agricultural sectors in the countries in the European Union. Conclusions from the empirical analysis are formulated in terms of cooperative market shares and variables measuring sector-level asset specificity, uncertainty, degree of product diversification, and country-level quality of contracting institutions.