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‘Just one of us’: consumers playing oligopoly in mixed markets

  • Marco Marini

    ()

  • Alberto Zevi

    ()

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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Article provided by Springer in its journal Journal of Economics.

Volume (Year): 104 (2011)
Issue (Month): 3 (November)
Pages: 239-263

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Handle: RePEc:kap:jeczfn:v:104:y:2011:i:3:p:239-263
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