The new-generation cooperative (NGC) is a significant organizational innovation that has fostered a new wave of farmer cooperative investment in value-added processing facilities. The NGC structure, based on tradable shares that are linked to the right and obligation to deliver specific quantities of raw product to the processing facility, helps overcome the free rider, horizon, portfolio, and control problems that have plagued traditional cooperatives. Over the past several years, however, concerns have begun to emerge about the longrun viability of this cooperative form, as several large NGCs have been taken over by or converted to investor-owned firms (IOFs).This article describes how the NGC's choice of stock trading rules and procedures affects NGC formation and takeover. We consider a perfectly competitive market for NGC stock as well as discriminatory auction and competitive auction stock trading mechanisms. Drawing on results from a dynamic, heterogeneous agent model of the market for NGC stock developed by Holland, we analyze how each of these stock trading mechanisms affects the reversibility of an investment in an NGC and, consequently, the conditions under which the NGC will form or be sold to an IOF.

The information asymmetries inherent in credence goods have typically led economists to conclude these markets require well-defined quality standards and third-party verification that producers are meeting those standards. Nonetheless, many producers of credence goods appear to be opting out of certification. Why? This paper builds in previous research and develops a theoretical framework to think about how producers' motivation and relationships with consumers affect the necessity and effectiveness of certification. I find the degree to which a consumer trusts the producer of a credence good and the certification standard that governs it and the degree to which the producer is motivated to produce a good of a certain quality both have important effects on certification-based regulation.

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