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Capital procurement of a consumer cooperative: Role of the membership market

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  • Mikami, Kazuhiko

Abstract

Cooperative firms are commonly thought to be financially weak and unable to flourish in the market economy. This paper addresses the idea that a consumer cooperative issues a membership, which represents an ownership share in the cooperative, as a method of procuring equity capital. It then shows that, in theory, consumer cooperatives are not necessarily financially weaker than investor-owned firms in the presence of a membership market. This implies that the consumer cooperative is potentially a promising alternative to the investor-owned firm when the latter type of firm induces serious market failure in the product market.

Suggested Citation

  • Mikami, Kazuhiko, 2010. "Capital procurement of a consumer cooperative: Role of the membership market," Economic Systems, Elsevier, vol. 34(2), pages 178-197, June.
  • Handle: RePEc:eee:ecosys:v:34:y:2010:i:2:p:178-197
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
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    3. Kazuhiko Mikami, 2007. "Asymmetric Information and the Form of Enterprise: Capitalist Firms and Consumer Cooperatives," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 297-312, June.
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    8. Tirole, Jean, 2001. "Corporate Governance," Econometrica, Econometric Society, vol. 69(1), pages 1-35, January.
    9. Gregory Dow, 1996. "Replicating Walrasian equilibria using markets for membership in labor-managed firms," Review of Economic Design, Springer;Society for Economic Design, vol. 2(1), pages 147-162, December.
    10. Schmidt, Klaus M., 1996. "Incomplete contracts and privatization," European Economic Review, Elsevier, vol. 40(3-5), pages 569-579, April.
    11. Ben-Ner, Avner & Jun, Byoung, 1996. "Employee Buyout in a Bargaining Game with Asymmetric Information," American Economic Review, American Economic Association, vol. 86(3), pages 502-523, June.
    12. Cario Daniela, 2005. "Aufnahme von Investorenmitgliedern in die SCE? - Gedanken zur Ausübung des Wahlrechts in Art. 14 Abs. 2 SCE-VO durch den deutschen Gesetzgeber," Zeitschrift für das gesamte Genossenschaftswesen, De Gruyter, vol. 55(1), pages 146-152, June.
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    Cited by:

    1. 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.
    2. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    3. Bert Sadowski, 2014. "Consumer Cooperatives as a new Governance Form: The Case of the Cooperatives in the Broadband Industry," Working Papers 14-03, Eindhoven Center for Innovation Studies, revised Feb 2014.
    4. repec:eee:ecosys:v:41:y:2017:i:1:p:86-97 is not listed on IDEAS
    5. Marco A. MARINI & Paolo POLIDORI & Desiree TEOBALDELLI & Alberto ZEVI, 2015. "Welfare Enhancing Coordination In Consumer Cooperatives Under Mixed Oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 505-527, September.

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