'Just one of us': Consumers playing oligopoly in mixed markets
AbstractConsumer cooperatives represent a highly successful example of democratic form of enterprises operating in developed countries. They are usually medium to large-scale companies competing with the profit-maximizing firms in the retail sector. This paper describes this situation as a mixed oligopoly in which consumer cooperatives maximize the utility of consumer-members and, in return, refund them with a share of the profits corresponding to the ratio of their individual spending to the cooperative's total sales. We show that when consumers possess quasi-linear preferences over a bundle of symmetrically differentiated goods, and companies operate using a linear technology, the presence of consumer cooperatives positively affects total industry output, as well as welfare. The effect of cooperatives on welfare proves to be even more significant when goods are either complements or highly differentiated, and when competition is à la Cournot rather than à la Bertrand.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 31213.
Date of creation: 01 Aug 2010
Date of revision: 30 May 2011
Consumer Cooperatives; Profit-maximizing Firms; Mixed Oligopoly;
Other versions of this item:
- Marco Marini & Alberto Zevi, 2011. "‘Just one of us’: consumers playing oligopoly in mixed markets," Journal of Economics, Springer, vol. 104(3), pages 239-263, November.
- Marco Marini & Alberto Zevi, 2011. "Just One Of Us: Consumers Playing Oligopoly In Mixed Markets," Working Papers 0111, CREI Università degli Studi Roma Tre, revised 2011.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
- P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-13 (All new papers)
- NEP-COM-2011-07-13 (Industrial Competition)
- NEP-MKT-2011-07-13 (Marketing)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:cep:stitep:292 is not listed on IDEAS
- Arthur L. Bekenstein, 1943. "A Theoretical Analysis of Consumer Co-Operatives: The Managerial Problem," Journal of Political Economy, University of Chicago Press, vol. 51, pages 251.
- de Fraja, Giovanni & Delbono, Flavio, 1990. " Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
- Oliver Hart & John Moore, 1998.
"Cooperatives vs. Outside Ownership,"
STICERD - Theoretical Economics Paper Series
346, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Oliver Hart & John Moore, 2004. "Cooperatives vs. Outside Ownership," ESE Discussion Papers 114, Edinburgh School of Economics, University of Edinburgh.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," Harvard Institute of Economic Research Working Papers 1816, Harvard - Institute of Economic Research.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," NBER Working Papers 6421, National Bureau of Economic Research, Inc.
- Cremer, H. & Marchand, M. & Thisse, J.-F., 1987.
"The public firm as an instrument for regulating an oligopolistic market,"
CORE Discussion Papers
1987010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cremer, Helmuth & Marchand, Maurice & Thisse, Jacques-Francois, 1989. "The Public Firm as an Instrument for Regulating an Oligopolistic Market," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 283-301, April.
- CREMER, Helmuth & MARCHAND, Maurice & THISSE, Jacques-François, . "The public firm as an instrument for regulating an oligopolistic market," CORE Discussion Papers RP -832, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Fulton, Murray E., 1989. "Cooperatives in Oligopolistic Industries: The Western Canadian Fertilizer Industry," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 4.
- Oliver Hart & John Moore, 1996.
"The Governance of Exchanges: Members' Co-operatives Versus Outside Ownership,"
STICERD - Theoretical Economics Paper Series
/1996/292, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Hart, Oliver & Moore, John, 1996. "The Governance of Exchanges: Members' Cooperatives versus Outside Ownership," Oxford Review of Economic Policy, Oxford University Press, vol. 12(4), pages 53-69, Winter.
- David Kelsey & Frank Milne, 2010. "Takeovers and cooperatives: governance and stability in non-corporate firms," Journal of Economics, Springer, vol. 99(3), pages 193-209, April.
- Hamilton, J.H. & Slutsky, S.M., 1988.
"Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria,"
88-4, Florida - College of Business Administration.
- Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
- Marco Marini & Alberto Zevi, 2010. "Consumer Cooperatives and Welfare in a Mixed Oligopoly," Working Papers 1010, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2010.
- de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April.
- Goering, Gregory E., 2008. "Welfare impacts of a non-profit firm in mixed commercial markets," Economic Systems, Elsevier, vol. 32(4), pages 326-334, December.
- Frank Milne & David Kelsey, 2006. "Takeovers and Cooperatives," Working Papers 1113, Queen's University, Department of Economics.
- Corneo, Giacomo G., 1997. "Taxpayer-consumers and public pricing," Economics Letters, Elsevier, vol. 57(2), pages 235-240, December.
- Joseph Farrell, 1985.
"Owner-Consumers and Efficiency,"
380, Massachusetts Institute of Technology (MIT), Department of Economics.
- David Kelsey & Frank Milne, 2008.
"Imperfect Competition and Corporate Governance,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 10(6), pages 1115-1141, December.
- Tennbakk, Berit, 1992. "The Case of Cooperative Mixed Duopoly," Institute for Research on Labor and Employment, Working Paper Series qt8wp406w7, Institute of Industrial Relations, UC Berkeley.
- Mikami, Kazuhiko, 2010. "Capital procurement of a consumer cooperative: Role of the membership market," Economic Systems, Elsevier, vol. 34(2), pages 178-197, June.
- Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
- Pennerstorfer, Dieter & Weiss, Christoph R., 2007. "Do Cooperatives Offer High Quality Products?," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9403, European Association of Agricultural Economists.
- Cremer, Helmuth & Cremer, Jacques, 1992. "Duopoly with employee-controlled and profit-maximizing firms: Bertrand vs Cournot competition," Journal of Comparative Economics, Elsevier, vol. 16(2), pages 241-258, June.
- Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
- Svend Albæk & Christian Schultz, 1998.
"On the relative advantage of cooperatives,"
CIE Discussion Papers
1998-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- 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.
- Mikami, Kazuhiko, 2003. "Market power and the form of enterprise: capitalist firms, worker-owned firms and consumer cooperatives," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 533-552, December.
- Michael Kopel & Marco Marini, 2012.
"Optimal Compensation Structure In Consumer Cooperatives Under Mixed Oligopoly,"
0512, CREI Università degli Studi Roma Tre, revised 2012.
- Michael Kopel & Marco A. Marini, 2012. "Optimal Compensation Structure in Consumer Cooperatives under Mixed Oligopoly," DIS Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
- Marco Marini & Paolo Polidori & Alberto Zevi & Désirée Teobaldelli, 2013. "Welfare Enhancing Coordination in Consumer Cooperatives under Mixed Oligopoly," Working Papers 1303, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
- Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.
- Michael Kopel & Marco Marini, 2013. "Strategic Delegation In Consumer Cooperatives Under Mixed Oligopoly," Working Papers 1306, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.