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Takeovers and Cooperatives

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  • Milne, Frank
  • Kelsey, David

Abstract

If consumers wholly or partially control a rm with market power they will charge less than the pro t maximising price. Starting at the usual monopoly price, a small price reduction will have a second order e¤ect on pro ts but a rst order e¤ect on consumer surplus. Despite this desirable static result, it has been argued that cooperatives are vulnerable to take-over by outsiders who will run them as for-pro t businesses. This paper studies takeovers of cooperatives. We argue that cooperatives are in fact quite stable due to the Grossman-Hart problem of free riding during takeovers.

Suggested Citation

  • Milne, Frank & Kelsey, David, 2006. "Takeovers and Cooperatives," Queen's Economics Department Working Papers 273589, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:273589
    DOI: 10.22004/ag.econ.273589
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    References listed on IDEAS

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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.

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    Keywords

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    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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