Inequality, Control Rights, and Rent Seeking: Sugar Cooperatives in Maharashtra
نویسندگان
چکیده
This paper presents a theory of rent seeking within farmer cooperatives in which inequality of asset ownership affects relative control rights of different groups of members. The two key assumptions are constraints on lump-sum transfers from poorer members and dispro-This paper could not have been completed without the support and encouragement that we received from Shivajirao Patil and Jamsheed Kanga. The staff of the Maharashtra State Federation of Cooperative Sugar Factories, the Directorate of Economics and Statistics , Mumbai, and the Agricultural Census, Shivajinagar, assisted us with the collection of the data. We would like to thank Poorti Marino for excellent research assistance and Jack Porter for many helpful discussions. We received helpful comments from an anonymous referee, and the John Simon Guggenheim Foundation (to Ray) is gratefully acknowledged. We are responsible for any errors that may remain. sugar cooperatives 139 portionate control rights wielded by wealthier members. Transfers of rents to the latter are achieved by depressing prices paid for inputs supplied by members and diverting resulting retained earnings. The theory predicts that increased heterogeneity of landholdings in the local area causes increased inefficiency by inducing a lower input price and a lower level of installed crushing capacity. Predictions concerning the effect of the distribution of local landownership on sugarcane price, capacity levels, and participation rates of different classes of farmers are confirmed by data from nearly 100 sugar cooperatives in the Indian state of Maharashtra over the period 1971–93.
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