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Competition rules and the cooperative firm

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  • Michele Grillo

    () (Università Cattolica del Sacro Cuore)

Abstract

This paper investigates whether and under what conditions the working of cooperative firms can be affected by competition law or market-enhancing regulations. The nature of collective benefits sought by different types of cooperative enterprises is analysed to show whether and how a tension may arise between the market mechanism and the mechanisms through which alternative collective benefits are attained by cooperative firms. On the whole, market-enhancing regulations have an ambiguous impact both on the working of cooperatives and on social efficiency. While benefitting society, a market enhancement reduces the scope for cooperative firms aiming at reducing the deadweight loss in imperfectly competitive markets. A similar conclusion holds if the cooperative firm aims at protecting an investment decision from a hold-up problem, provided that the market enhancement enlarges the set of outside options for the firm’s stakeholders. A market enlargement has a positive impact both on the working of cooperatives and on social efficiency when the aim of the cooperative firm is to prevent shirking in team production. In contrast, a negative impact ensues, with adverse consequences both for social efficiency and the cooperative firm, when the collective benefit sought by the latter is to overcome asymmetric information, as typically happens in the case of credit cooperatives.

Suggested Citation

  • Michele Grillo, 2013. "Competition rules and the cooperative firm," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 37-53, July.
  • Handle: RePEc:trn:csnjrn:v:2:i:1:p:37-53
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    References listed on IDEAS

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    4. Gian Paolo Barbetta & Luca Colombo & Stefano Colombo & Michele Grillo, 2016. "Intra-competitiveness and inter-competitiveness among mutual banks: the case of Trento," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(3), pages 195-214, September.
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    Citations

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    Cited by:

    1. Paolo Coccorese & Giovanni Ferri & Punziana Lacitignola & Juan Lopez, 2016. "Market structure, outer versus inner competition: the case of Italy’s credit coop banks," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(3), pages 259-279, September.
    2. Michele Grillo, 2013. "Competition rules and the cooperative firm," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 37-53, July.
    3. Paolo Coccorese & Giovanni Ferri, 2017. "Is Competition Among Cooperative Banks a Negative Sum Game?," CERBE Working Papers wpC19, CERBE Center for Relationship Banking and Economics.
    4. Gianluca Salvatori, 2012. "La cooperazione ai tempi della crisi Risultati di un�indagine esplorativa condotta su piano nazionale," Euricse Working Papers 1237, Euricse (European Research Institute on Cooperative and Social Enterprises).
    5. Maged Eid & Federico Mart�nez-Carrasco Pleite, 2014. "International Year of Cooperatives and the 2020 Vision," Euricse Working Papers 1471, Euricse (European Research Institute on Cooperative and Social Enterprises).
    6. Gian Paolo Barbetta & Luca Colombo & Stefano Colombo & Michele Grillo, 2016. "Intra-competitiveness and inter-competitiveness among mutual banks: the case of Trento," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(3), pages 195-214, September.

    More about this item

    Keywords

    Cooperative enterprises; credit cooperatives;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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