Is There a Cooperative Advantage? Experimental Evidence on Economic and Social Variables as Determinants of Demand

28 Pages Posted: 13 May 2015 Last revised: 14 May 2015

Date Written: May 11, 2015

Abstract

Survey instruments are used to examine the role which ‘warm glow’, social cohesion or identity play in determining the demand for the output of consumer cooperatives. Almost 300 students are surveyed. My findings challenge the narrow economic worldview that only economic variables count; but support a core economic assumption that economic variables are of fundamental importance to individual’s choice decisions. Significantly, individuals are willing to pay higher prices for cooperative products even if they are not members of cooperatives. However, as the price of cooperative products increases relative to the products of non-cooperatives, demand falls amongst both non-members and members of cooperatives. But demand is more inelastic for coop members. The cooperative advantage provides coops with a protective belt against competition from non-cooperatives. This speaks to the potential strength of consumer coops in competitive markets. Firms that invest in both economic and non-economic determinants of consumer demand should be characterized by a significant competitive advantage.

Keywords: cooperatives, warm glow, demand, survey experiments, identity, social cohesion

JEL Classification: B59, D03, P13

Suggested Citation

Altman, Morris, Is There a Cooperative Advantage? Experimental Evidence on Economic and Social Variables as Determinants of Demand (May 11, 2015). Available at SSRN: https://ssrn.com/abstract=2605190 or http://dx.doi.org/10.2139/ssrn.2605190

Morris Altman (Contact Author)

University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

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