31 producer prices, do not depend on these claims, only the specific identification of market power (i.e. separation of efficiency from market power) does.

That cooperatives are less (scale) efficient than other mills is not controversial. It has already been alluded to in Section V, where the liquidity constraints particular to cooperatives are binding in their ability to contract sufficient quantities of coffee early in the harvest. As was seen there, the extra services offered by cooperatives reduce the operating capital they might otherwise use as lucrative advance payments. In Costa Rica, the services offered by cooperatives can be extensive, including agro-technical advice, health services, community shops, etc. (for a fuller description of cooperative services, see Ronchi 2002a). Non-cooperative mills have higher liquidity and therefore can afford to pay producers higher advance payments. These higher payments provide incentives to farmers to sell to the non-cooperative mill, either because their financial need is great at that moment or because they believe the ultimate harvest price will be higher (which, often, it is not). Furthermore, since the time of fieldwork for this paper, where this information about cooperatives was gathered through interviews, a cost study for Costa Rican mills explicitly evaluated the scale efficiency of cooperative mills vis-à-vis non-cooperative mills from 19881993 and found that cooperative mills are, in fact, less scale efficient than noncooperative mills (Mosheim 2002).

The second claim, that cooperative mills operate on the supply curve and not the marginal factor cost curve, is the claim that cooperatives never exercise market power. At some level, this is almost a tautology: Cooperatives are owned by members, so ‘the mill’ and ‘the farmer’ are conceptually indistinct. For the exercise of market power, collusion between the cooperative and exporter is required. The cooperative, at this level, cannot cheat itself. At a different level, this claim may be contested on the grounds that it is not the collective membership that enters into contract with the exporter, but the cooperative leader (manager). If there is corruption,

* cooperative margins (p* - p R ) may well reflect market power. It is argued here, not that corruption never happens in Costa Rica, but that this outcome is unlikely to affect the empirical measures used in this paper.  During the course of six months spent on fieldwork in Costa Rica, actors from different parts of the industry attested to the high level of accountability in cooperatives. Tellingly, this testimony did not just come from cooperative leaders, who can be expected to claim this, but from farmers and from Icafé as well. In the first instance, farmers have memory of having deposed corrupt cooperative leaders. Such events were rare, but were scandalous and high profile. When undertaking interviews at Icafé while assembling the data set for this paper, the author made inquiries concerning cooperatives whose time series suddenly ceased or whose status changed to private hands. In the few occasions that this occurred, it was matter-of-factly communicated that the producers had fired the cooperative manager and dissolved the cooperative. This level of pro-activity is unsurprising knowing the solidarity history in Latin America. It is therefore not deemed problematic to maintain that cooperatives are unlikely to ‘cheat’ themselves. Furthermore, there is precedence of this treatment of cooperatives in the literature (see for example, Sexton 1990).

While it is acknowledged that this identification procedure for market power is not universally applicable in all markets, in light of the disagreement surrounding the inference of market power from SCP, structural and nonparametric models, the