Consumer Cooperatives and Welfare in a Mixed Oligopoly
Marco A. Marini
Sapienza Università di Roma ; CREI, University Rome III
affiliation not provided to SSRN
July 10, 2010
University of Urbino Economics, Mathematics and Statistics Working Paper No. 2010/10
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 affects 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 differentiated and when competition is à la Cournot rather than à la Bertrand.
Number of Pages in PDF File: 28
Keywords: Consumer Co-operatives, Profi t-maximizing Firms, Mixed Oligopoly
JEL Classification: L21, L22, L31working papers series
Date posted: December 18, 2010
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