Market power, markup volatility and the role of cooperatives in the food value chain: evidence from Italy

Agricultural cooperatives are often promoted as a way to give farmers countervailing market power and greater income stability. This paper investigates to what extent cooperatives in food supply chains achieve these objectives. We estimate firm-level markups and markup volatility in the Italian fruits and vegetable (F&V) and dairy sectors at both the farming and processing stages for the period 2007-2014. We find mixed results: compared to non-cooperatives, F&V processor cooperatives have higher markups, while F&V farmer cooperatives and dairy processor cooperatives have lower markups. We do not find strong evidence of their role on markup volatility.