The (Bargaining) Power of Incentives: Cooperatives, For-Profit Firms and the Cost of Procurement
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In this paper, we show formally that cooperatives can possess an informational - and hence cost - advantage compared to For Profit Firms. This advantage is directly linked to the goal alignment between the cooperative and its members, and is influenced by the extent of income redistribution between members. Hence the standard practice of modeling the cooperative and the FPF as having identical cost structures appears to be theoretically unsound.