Welfare enhancing coordination in consumer cooperatives under mixed oligopoly

Marco Marini, Paolo Polidori, Désirée Teobaldelli and Alberto Zevi

No 2014-10, DIAG Technical Reports from Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"

Abstract: The recent globalization of world economies has led the retail markets of developed countries towards increasing levels of integration and strategic interdependence. A non negligible share of retail and food markets is currently served by co-operative societies. Consistently with this trend, the consumer cooperatives have recently experienced increasing levels of integration. The main aim of this paper is to study the welfare effects of coordination among consumer cooperatives competing in quantities in a mixed oligopoly against profit-maximizing firms. We show that, in absence of agency problems, whereas under increasing or constant returns to scale a higher output coordination of consumer cooperatives may not affect the total welfare as long as a nonnegative profit constraint holds, under decreasing returns to scale the consumer cooperatives may contribute more to social welfare when acting on behalf of all consumers. This is because, by coordinating consumers' preferences, these firms can reduce their market output, thus helping the market to come closer to the first best. All together these results seem to provide an argument in favor of the recent process of integration involving consumer cooperatives in many developed countries.

Keywords: Consumer Cooperatives; Mixed Oligopoly; Profit-maximizing Firms; Mergers (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-com and nep-mkt
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Citations: View citations in EconPapers (1)

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http://www.dis.uniroma1.it/~bibdis/RePEc/aeg/report/2014-10.pdf First version, 2014 (application/pdf)

Related works:
Journal Article: WELFARE ENHANCING COORDINATION IN CONSUMER COOPERATIVES UNDER MIXED OLIGOPOLY (2015)
Working Paper: Welfare Enhancing Coordination in Consumer Cooperatives under Mixed Oligopoly (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:aeg:report:2014-10

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