Optimization of individual stages within a production-marketing chain (PMCh) may cause a suboptimal result of the PMCh as a whole. Market imperfections and conflicting interest may be the causal factors. Although vertical integration is often mentioned as the conventional solution, certain disadvantages and the large scale differences in agricultural PMChs make vertical cooperation a more appropriate alternative. Moreover, specific characteristics of agricultural food chains and changing market circumstances, including increased interest in the quality of products and production processes, justify renewed attention to vertical cooperation and product differentiation in agriculture. Current developments in the Dutch pork PMCh and implications on future research are described. © 1996 John Wiley & Sons, Inc.