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Got (clean) milk? Organization, incentives, and management in Indian dairy cooperatives

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  • Rao, Manaswini
  • Shenoy, Ashish

Abstract

Smallholder producers in developing countries often collaborate in teams that take advantage of scale economies and allocate surplus among members. We experimentally evaluate team-level incentive contracts for quality upgrading among Indian dairy cooperatives where there is a risk of free-riding because individual quality cannot be traced. Incentives improve aggregate quality, with evidence of increased effort from both producers and cooperative managers. However, several managers decline incentive payments when they cannot control how payment information is disclosed to cooperative members. Survey evidence indicates publicity lowers managerial returns, suggesting transparency-based efforts to constrain elites can undermine the core policy goal.

Suggested Citation

  • Rao, Manaswini & Shenoy, Ashish, 2023. "Got (clean) milk? Organization, incentives, and management in Indian dairy cooperatives," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 708-722.
    • Handle: RePEc:eee:jeborg:v:212:y:2023:i:c:p:708-722
    DOI: 10.1016/j.jebo.2023.06.002
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    More about this item

    Keywords

    Quality upgrading; Cooperatives; Dairy; Elite capture; India;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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