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Just One Of Us: Consumers Playing Oligopoly In Mixed Markets

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  • Marco Marini
  • Alberto Zevi

    ()
    (University of Urbino "Carlo Bo", University of Roma "La Sapienza")

Abstract

Consumer cooperatives constitute a highly successful example of democratic forms of enterprises operating in developed countries. They are usually organized as medium and large-scale ?rms competing with pro?t-maximizing ?rms in retail industries. This paper models such situation as a mixed oligopoly in which consumer cooperatives maximize the utility of consumer-members and distribute them a share of the pro?t equal to the ratio of their individual expenditure to the ?rm total sales. We show that when consumers possess quasilinear preferences over a bundle of symmetrically di¤erentiated goods and ?rms operate with a linear technology, the presence of consumer cooperatives a¤ects all industries output and social welfare positively. The e¤ect of cooperatives on welfare proves more signi?cant when goods are either complements or highly di¤erentiated and when competition is à la Cournot rather than à la Bertrand.

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Bibliographic Info

Paper provided by CREI Università degli Studi Roma Tre in its series Working Papers with number 0111.

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Length: 25 pages
Date of creation: 2011
Date of revision: 2011
Handle: RePEc:rcr:wpaper:01_11

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Keywords: Consumer Cooperatives; Pro?t-maximizing Firms; Mixed Oligopoly;

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References

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  1. 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.
  2. Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," Harvard Institute of Economic Research Working Papers 1816, Harvard - Institute of Economic Research.
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  9. Mikami, Kazuhiko, 2010. "Capital procurement of a consumer cooperative: Role of the membership market," Economic Systems, Elsevier, vol. 34(2), pages 178-197, June.
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  15. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
  16. 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.
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  23. Frank Milne & David Kelsey, 2006. "Takeovers and Cooperatives," Working Papers 1113, Queen's University, Department of Economics.
  24. 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.
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Citations

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Cited by:
  1. 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.
  2. Saha, Souresh, 2014. "Firm's objective function and product and process R&D," Economic Modelling, Elsevier, vol. 36(C), pages 484-494.
  3. 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.
  4. 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".
  5. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.

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