Munich Personal RePEc Archive

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

Marco, Marini and Alberto, Zevi (2010): 'Just one of us': Consumers playing oligopoly in mixed markets. Forthcoming in: Journal of Economics

[img]
Preview
PDF
MPRA_paper_31213.pdf

Download (319kB) | Preview

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.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.