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Cooperatives for fruits and vegetables in emerging countries: Rationalization and impact of decentralization
Affiliation:1. School of Science, Changchun University of Science and Technology, Changchun 130022, China;2. College of Information Technology, Jilin Normal University, Siping 136000, China;1. Electrical and Computer Engineering, North Carolina State University, United States;2. Coordinated Science Laboratory, University of Illinois Urbana Champaign, United States;1. University of California Berkeley, Department of Civil and Environmental Engineering, Berkeley, CA, USA;2. Helmholtz Centre for Environmental Research – UFZ, Computational Hydrosystems, Leipzig, Germany;3. Brigham Young University, Department of Civil and Environmental Engineering, Provo, UT, USA;1. Department of Chemistry, University of Calcutta, 92, A. P. C. Road, Kolkata 700009, India;2. Department of Chemical and Pharmaceutical Sciences University of Trieste, Via L. Giorgieri 1, 34127 Trieste, Italy;3. Department of Chemistry, Sarojini Naidu College for Woman, Kolkata 700028, India;1. Free University of Bolzano, Faculty of Economics and Management, Piazza dell''Università 1, 39100 Bolzano, Italy;2. Indian Institute of Management Ahmedabad, Vastrapur, Ahmedabad 380 015, India;3. UK Competition and Markets Authority (CMA), Mergers, Victoria House, Southampton Row, London WC1B 4AD, United Kingdom;1. Department of Civil Engineering, University of Toronto, 35 St. George Street, Toronto, ON M5S 1A4, Canada;2. Department of Civil Engineering, Sharif University of Technology, Tehran, Iran
Abstract:We develop a (noncooperative) game theoretic model for a decentralized setting wherein fringe farmers compete with a two-tier cooperative network involving network farmers and a coordinator. We examine the roles of the coordinator and profit sharing in allocating costs/benefits of externalities in enhancing network efficiency and stability. Our main finding is that using profit sharing based mechanism the coordinator can overcome inherent inefficiency and instability of decentralization and noncooperative behavior of the network farmers. The roles of the coordinator and profit sharing are particularly important when it is economical for both network and fringe farmers to supply the product.
Keywords:Supply chain  Network externalities  Decentralization  Competition  Stability  Game theory
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