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Consumer Cooperatives and Welfare in a Mixed Oligopoly

Author

Listed:
  • Marco Marini

    () (Department of Economics, University of Urbino "Carlo Bo".)

  • Alberto Zevi

    () (University of Rome "La Sapienza".)

Abstract

Consumer co-operatives constitute a highly successful example of democratic forms of enterprises operating in developed countries. They are usually organized as medium or large-scale firms competing with profit seeking firms in retail industries. In this paper we model such a situation as a mixed oligopoly in which consumer co-operatives maximize consumer-members' utilities and distribute them a patronage rebate on their goods purchase. We show that when consumers possess quasilinear preferences over a bundle of symmetrically differentiated goods and firms operate with a linear technology, the presence of consumer co-operatives positively a¤ects all industries output and social welfare. The effect of Co-ops on welfare is shown to be more significant when goods are either complements or highly di¤erentiated and when competition is à la Cournot rather than à la Bertrand.

Suggested Citation

  • Marco Marini & Alberto Zevi, 2010. "Consumer Cooperatives and Welfare in a Mixed Oligopoly," Working Papers 1010, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2010.
  • Handle: RePEc:urb:wpaper:10_10
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    File URL: http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_10_10.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. de Fraja, Giovanni & Delbono, Flavio, 1990. " Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
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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. Derek C. Jones & Panu Kalmi, 2013. "Cooperative enterprise," Chapters,in: Handbook on the Economics of Reciprocity and Social Enterprise, chapter 8, pages 85-93 Edward Elgar Publishing.

    More about this item

    Keywords

    Consumer Co-operatives; Profit-maximizing Firms; Mixed Oligopoly.;

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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