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Welfare enhancing coordination in consumer cooperatives under mixed oligopoly

Author

Listed:
  • Marco Marini

    () (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")

  • Paolo Polidori

    () (Universita' degli Studi di Urbino "Carlo Bo")

  • Desiree Teobaldelli

    () (Universita' degli Studi di Urbino "Carlo Bo")

  • Alberto Zevi

    () (Centro Studi Legacoop, Rome, Italy)

Abstract

The recent globalization of world economies has led the retail markets of developed countries towards increasing levels of integration and strategic interdependence. A non negligible share of retail and food markets is currently served by co-operative societies. Consistently with this trend, the consumer cooperatives have recently experienced increasing levels of integration. The main aim of this paper is to study the welfare effects of coordination among consumer cooperatives competing in quantities in a mixed oligopoly against profit-maximizing firms. We show that, in absence of agency problems, whereas under increasing or constant returns to scale a higher output coordination of consumer cooperatives may not affect the total welfare as long as a nonnegative profit constraint holds, under decreasing returns to scale the consumer cooperatives may contribute more to social welfare when acting on behalf of all consumers. This is because, by coordinating consumers' preferences, these firms can reduce their market output, thus helping the market to come closer to the first best. All together these results seem to provide an argument in favor of the recent process of integration involving consumer cooperatives in many developed countries.

Suggested Citation

  • Marco Marini & Paolo Polidori & Desiree Teobaldelli & Alberto Zevi, 2014. "Welfare enhancing coordination in consumer cooperatives under mixed oligopoly," DIAG Technical Reports 2014-10, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  • Handle: RePEc:aeg:report:2014-10
    as

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    References listed on IDEAS

    as
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    Cited by:

    1. Tomori, Françeska, 2018. "Mixed Duopoly in Education with Vouchers," Working Papers 2072/306548, Universitat Rovira i Virgili, Department of Economics.
    2. repec:kea:keappr:ker-20170630-33-1-06 is not listed on IDEAS
    3. Sumi Cho & Sang-Ho Lee, 2017. "Subsidization Policy on the Social Enterprise for the Underprivileged," Korean Economic Review, Korean Economic Association, vol. 33, pages 153-178.

    More about this item

    Keywords

    Consumer Cooperatives ; Mixed Oligopoly ; Profit-maximizing Firms; Mergers;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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