'Just one of us': Consumers playing oligopoly in mixed markets

Marco Marini and Alberto Zevi

MPRA Paper from University Library of Munich, Germany

Abstract: Consumer cooperatives represent a highly successful example of democratic form of enterprises operating in developed countries. They are usually medium to large-scale companies competing with the profit-maximizing firms in the retail sector. This paper describes this situation as a mixed oligopoly in which consumer cooperatives maximize the utility of consumer-members and, in return, refund them with a share of the profits corresponding to the ratio of their individual spending to the cooperative's total sales. We show that when consumers possess quasi-linear preferences over a bundle of symmetrically differentiated goods, and companies operate using a linear technology, the presence of consumer cooperatives positively affects total industry output, as well as welfare. The effect of cooperatives on welfare proves to be even more significant when goods are either complements or highly differentiated, and when competition is à la Cournot rather than à la Bertrand.

Keywords: Consumer Cooperatives; Profit-maximizing Firms; Mixed Oligopoly (search for similar items in EconPapers)
JEL-codes: D01 D21 I30 L13 P13 (search for similar items in EconPapers)
Date: 2010-08-01, Revised 2011-05-30
New Economics Papers: this item is included in nep-com and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: ‘Just one of us’: consumers playing oligopoly in mixed markets (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:31213

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