COLLECTIVE AGRICULTURAL PRODUCTION - A SOLUTION FOR TRANSITION ECONOMIES

The paper examines theoretical reasons and provides examples for productivity differences between agricultural service cooperatives and collectives. Service cooperatives can utilize economies of scale, enhance competitiveness, and provide technical information, advantages that often outweighed problems of free-riding, low investment, and excessive political intervention. Agricultural collectives, while not adding substantial advantages, are in addition associated with problems of supervision and effort supply, tendencies to substitute casual workers or mechanization for regular members, and low investment incentives. While collective forms of organization in transition economies respond to high risk and market imperfections, they do so inefficiently. Policies that create conditions for service cooperatives to compete may lead to large productivity gains.