Conclusions
This paper seeks to examine how cooperative membership affects farmers’ choice of marketing channels. Using transaction cost economics as a theoretical framework, we employ three endogenous switching probit models to estimate the determinants of each marketing channel based on field survey data collected among 625 farming households in Shaanxi and Shandong provinces in China. The empirical results show that cooperative membership has a significantly positive effect on the choice of wholesalers as marketing channels, along with a negative effect on choosing small dealers and an insignificant effect on choosing cooperatives. We explain the varying effects of cooperative membership on farmers’ choice of the different marketing channels mainly from the perspective of services by cooperatives. Both the current small market share represented by cooperatives and the services provided by cooperatives, especially the marketing information service and marketing coordination activities for members, explain the insignificant effect of cooperative membership on farmers’ choice of cooperatives as the marketing channel. Even if cooperatives do not buy their members’ apples, most of them collect marketing information, introduce wholesalers to members and help coordinate transactions for members. Membership thus exerts a positive effect on the choice of wholesalers, but a negative effect on the choice of small dealers, as a marketing channel.