Abstract
The paper discusses the government policy that encourages the emergence of co-operatives and analyzes the co-operatives in light of their growth in number. It establishes a static equilibrium and highlights the co-operatives’ adjustment process (dynamic equilibrium).The methodology/approach consists of the development of a theoretical model, using the Nash equilibrium for the co-operative market, and the determination of a static equilibrium. It presents the data which includes variable measurements for the adjustment process for agricultural, artisanal, and fishery co-operatives in order to analyze the stochastic process of entry-and-exit flow of co-operatives. Accordingly, the paper estimates the co-operatives’ growth index speed of adjustment (SOA) as a function of the mean-reversion Ornstein–Uhlenbeck (OU) process.The theoretical results indicate that co-operatives’ earnings depend on the number of co-operatives, market-demand, and the capacity constraint. They also show that the margin for new entrants is a dynamic gap that especially depends on demand, capacity constraint and the profits. The empirical results indicate that co-operatives growth-index process is significantly mean reverting for all sectors, and the speed of adjustment for artisanal co-operatives is significantly higher than for those in agriculture and the fisheries.
Highlights
In recent times, co-operatives have been regarded as organizations that have the potential to promote socio-economic development, reduce poverty (Bibby & Shaw, 2005; Birchall, 2004; Münkner, 2012) and control the socio-economic destiny of local communities (Nemon, 2000)
Otherwise, encouraging co-operative emergence can cause a market shift to a position that might be much closer to the one of perfect competition, but with differences in terms of capabilities that are supposed to be weak in co-operatives market. The rationale behind this argument is that entrepreneurial skills are assumed to depend on the adaptive tensions of the cyclic shifting from a managed economy toward an entrepreneurial one, or what Kirchhoff (1994) calls dynamic capitalism
To have a clear idea about how the number of co-operatives influences the dynamic changes that take place in the equilibrium process, we study the dynamic equilibrium by analyzing whether the growth in the number of co-operatives is a random-walk or mean-reversion process
Summary
Co-operatives have been regarded as organizations that have the potential to promote socio-economic development, reduce poverty (Bibby & Shaw, 2005; Birchall, 2004; Münkner, 2012) and control the socio-economic destiny of local communities (Nemon, 2000). 2. Conceptual game theory model and co-operatives’ static equilibrium Within entrepreneurial capabilities and innovation in co-operatives (Daft, 1978), members face structural changes of the market in terms of the number of co-operatives. Otherwise, encouraging co-operative emergence can cause a market shift to a position that might be much closer to the one of perfect competition (a big number of co-operatives and a big number of consumers), but with differences in terms of capabilities that are supposed to be weak in co-operatives market The rationale behind this argument is that entrepreneurial skills are assumed to depend on the adaptive tensions of the cyclic shifting from a managed economy toward an entrepreneurial one, or what Kirchhoff (1994) calls dynamic capitalism. For more details related to co-operatives’ values and principles, see Birchall, (2011), Mazzarol and Mamouni (2011), Münkner (2012)
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