Got (clean) Milk? Governance, Incentives, and Collective Action in Indian Dairy Cooperatives
Abstract: Much economic activity in developing countries takes place in groups whose members are associated through social networks. Group sales can connect small-scale producers to broader markets, but introduce opportunities for free-riding. We explore the effect of collective incentives on group production among rural Indian dairy cooperatives. In a randomized evaluation, we find village-level cooperatives can solve internal collective action problems to improve production quality. However, some village elites decline payments when they cannot control information dis- closure. Opting out reflects frictions in allocating surplus within a social network, and suggests some transparency-based efforts to limit elite capture may undermine policy goals.
