Over the past decade, widespread interest has developed among consumers in the formation of cooperatives, raising the question of how economically viable these cooperatives will be over time. This paper presents an analysis which shows that the potential for growth of consumer cooperatives will depend on the success of cooperatives in increasing management efficiency and in developing a range of more sophisticated financial instruments, including reorganizing as capital stock cooperatives and using borrowed capital. In addition, federation, consolidation and vertical integration may be needed. These conclusions are derived from analysis of the cost functions of the cooperative firm and from comparative analysis of the structural evolution of producer marketing cooperatives and consumer cooperatives.