Chapter 3 Using Agency Theory to Model Cooperative Public Purchasing Cliff McCue and Eric Prier INTRODUCTION The operational linkages between government organizations, their purchasers and their suppliers are now recognized as important contributors to the success of government policy and decision-making. Although cooperative purchasing has been a topic of study for many years (Anderson & Macie, 1996; Goodwyn, 1976; Johnson, 1983; Knapp, 1969; Miller, 1937; Saloutos & Hicks, 1951; Taylor, 1953), researchers have only recently revisited issues related to cooperative public purchasing (CPP) in search of more clarification with respect to its theoretical underpinnings (Aylesworth, 2003; Tulip, 1999; Wooten, 2003). Perhaps due to little theoretical direction and few standards to guide practice, there seems to be a lack of conceptual coherence within the cooperative purchasing literature to inform us concisely about what comprises cooperative procurement and its implications for public purchasing. Indeed, John Ramsay and Nigel Caldwell (2004) make a strong case that metaphors so often used can lead to misunderstanding the nature of interesting phenomenon. It is no different in public purchasing, as slight misconceptions about institutional goals and to whom one is accountable may in fact have significant organizational consequences. To help remedy this situation, this chapter provides a long-needed general framework in utilizing agency theory to analyze, define, and theoretically model cooperative public purchasing. A theory of CPP is needed for at least two reasons. First, a theory in this area can help all stakeholders in public procurement better understand the role they play in providing incentives for utilizing cooperatives in purchasing decisions. For example, the limited amount of extant research indicates that the term itself is conceptually muddled. Without a systematic theory to offer guiding principles for the phenomena called cooperative purchasing, the imprecise cognitive