Abstract:The relationship between the financial structure of a marketing cooperative （MC） and the requirement of the dominationof control by the members is analysed from a transaction costs perspective. A MC receives less favourable terms on outsideequity than a conventional firm because the decision power regarding new investments is not allocated to the providers ofthese funds. This is a serious threat to the survival of a MC in a market where efficient investments are characterised by anincreasing level of asset specificity at the processing stage of production. A MC is predicted to be an efficient organisationalform when the level of asset specificity at the processing stage of production is at a low or immediate level compared to thelevel of asset specificity at the farming stage of production. 

Keywords: Marketing cooperative,Financial structure,Transaction costs

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