Received: 3 March 2019 Accepted: 12 May 2020 DOI: 10.1111/cjag.12254 REGULAR ARTICLE Corruption in agricultural processing firms: A comparison of cooperatives and investor-owned firms Murray E. Fulton 1 Konstantinos Giannakas 2 1 Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan, Saskatoon, Saskatchewan, Canada 2 Agricultural Economics, University of Nebraska–Lincoln, Lincoln, Nebraska Correspondence Murray Fulton, Johnson Shoyama Grad- uate School of Public Policy, University of Saskatchewan, 101 Diefenbaker Place, Saskatoon, SK S7N 5B8, Canada. Email: Murray.Fulton@usask.ca Abstract This paper examines managerial corruption in cooperatives (co-ops) and investor-owned firms (IOFs), including its impact on prices and farmer wel- fare. Even when co-op managers have greater incentives to engage in corruption because of the co-op’s larger production, the resulting corruption is not suffi- cient to offset the competitive effect that co-ops exert vis-à-vis IOFs. This conclu- sion holds regardless of the functional form of the production function, the farm input supply curve, and the demand curve for the processed product. In addition to showing the robustness of the competition effect, the paper provides a highly flexible modeling framework that can be used to examine other co-op behavior questions. KEYWORDS cooperatives, corruption, investor-owned firms, mixed oligopsony JEL CLASSIFICATION D23, D71, L29, P13 Abstrait Cet article examine la corruption managériale dans les coopératives (coop) et les entreprises appartenant à des investis- seurs (EAI), y compris son impact sur les prix et le bien-être des agriculteurs. Même lorsque les gestionnaires de coops sont davantage incités à se livrer à la corruption en raison de la production plus importante de la coop, la corruption qui en résulte n’est pas suffisante pour compenser l’effet concurrentiel que les coops exercent vis-à-vis des EAI. Cette conclusion est valable, quelle que soit la forme fonctionnelle de la fonction de production, la courbe d’offre d’intrants agricoles et la courbe de demande pour le produit transformé. En plus de montrer la robustesse de l’effet de concur- rence, le document fournit un cadre de modélisation très flexible qui peut être utilisé pour examiner d’autres questions concernant le comportement des coops. 1 INTRODUCTION Cooperatives (co-ops), like other forms of business firms, operate within the prevailing economic environment. Corruption is an important part of this environment in many countries (Schneider, 2007). Although the literature is limited, there is evidence that co-ops experience corruption by managers, board members, and/or government officials. Corruption is viewed as a situation where there is “. . . some aspect of transaction for personal gain, ignoring of community trust, misuse Cand J Agr Econ. 2020;1–16. © 2020 Canadian Agricultural Economics Society 1 wileyonlinelibrary.com/journal/cjag