Welfare Enhancing Coordination in Consumer Cooperatives Under Mixed Oligopoly

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, under increasing or constant returns to scale a higher output coordination of the consumer cooperatives does not affect the total welfare as long as a nonnegative profit constraint holds in these firms. On the other hand, under decreasing returns to scale, the consumer cooperatives 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 favour of the recent process of integration involving consumer cooperatives in many developed countries

In Medio Stat Virtus: Does a Mixed Economy Increase Welfare?

“…Subsequently, the focus has shifted to efficiency generated by cooperative firms (e.g., Fulton and Giannakas , Delbono and Reggiani , Marini et al. ). Our work is focused on social enterprises and contributes to this literature.…”

Customer‐oriented employees: Blessing or curse for firms?

“…When the analysis focuses on these sectors, it is important to take into account that in many countries, these services are provided by both public and private institutions. Since in numerous markets, for‐profit firms compete with cooperative firms and nonprofit organizations, there is a growing literature on mixed oligopoly (see, for example, Casadesus‐Masanell & Ghemawat, ; and Marini, Polidori, Teobaldelli, & Zevi, ) . Considering a mixed oligopoly environment, in Manna (), I study the interaction between public and private firms and analyze how the presence of customer‐oriented employees impacts on the firms' profits and social welfare.…”