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Cognitive Dissonance and Customer Allegiance in a Mixed Oligopoly

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  • Lamprinakis, Lampros
  • Fulton, Murray E.

Abstract

The purpose of this article is to examine the effect of cognitive dissonance in a mixed oligopoly where a local cooperative competes with an investor-owned firm (IOF) for the local market. The article explicitly incorporates individuals' beliefs regarding the quality of the two organizations as a choice variable in the utility function and individuals trade off utility from beliefs against utility resulting from their actions. The proposed model considers a case where managerial decisions or the introduction of new products forces consumers to modify their initial beliefs regarding the (superior) quality of their cooperative. Analytical results demonstrate the changes in equilibrium that result from cognitive dissonance.

Suggested Citation

  • Lamprinakis, Lampros & Fulton, Murray E., 2006. "Cognitive Dissonance and Customer Allegiance in a Mixed Oligopoly," 2006 Annual meeting, July 23-26, Long Beach, CA 21228, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21228
    DOI: 10.22004/ag.econ.21228
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    References listed on IDEAS

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    3. Murray Fulton & Konstantinos Giannakas, 2001. "Organizational Commitment in a Mixed Oligopoly: Agricultural Cooperatives and Investor-Owned Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1258-1265.
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    Consumer/Household Economics;

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