Capital Procurement of a Consumer Cooperative: Role of the Membership Market

Posted: 30 Jul 2011  

Kazuhiko Mikami

University of Hyogo

Date Written: 2010

Abstract

Cooperative firms are commonly thought to be financially weak and unable to flourish in the market economy. This paper addresses the idea that a consumer cooperative issues a membership, which represents an ownership share in the cooperative, as a method of procuring equity capital. It then shows that, in theory, consumer cooperatives are not necessarily financially weaker than investor-owned firms in the presence of a membership market. This implies that the consumer cooperative is potentially a promising alternative to the investor-owned firm when the latter type of firm induces serious market failure in the product market.

Keywords: Consumer cooperative, Capital procurement, Membership market

JEL Classification: P13, P51

Suggested Citation

Mikami, Kazuhiko, Capital Procurement of a Consumer Cooperative: Role of the Membership Market (2010). Economic Systems, Vol. 34, No. 2, 2010. Available at SSRN: https://ssrn.com/abstract=1898682

Kazuhiko Mikami (Contact Author)

University of Hyogo ( email )

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