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University of Florida
Levin College of Law

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Wednesday, March 30, 2011

JUST ONE OF US: CONSUMERS PLAYING OLIGOPOLY IN MIXED MARKETS

Posted by D. Daniel Sokol

Marco Marini, University of Urbino “Carlo Bo” and Alberto Zevi, University of Roma “La Sapienza” discuss JUST ONE OF US: CONSUMERS PLAYING OLIGOPOLY IN MIXED MARKETS.

ABSTRACT: Consumer cooperatives constitute a highly successful example of democratic forms of enterprises operating in developed countries. They are usually organized as medium and large-scale firms competing with profit-maximizing firms in retail industries. This paper models such situation as a mixed oligopoly in which consumer cooperatives maximize the utility of consumer-members and distribute them a share of the profit equal to the ratio of their individual expenditure to the firm total sales. We show that when consumers possess quasilinear preferences over a bundle of symmetrically di¤erentiated goods and firms operate with a linear technology, the presence of consumer cooperatives a¤ects all industries output and social welfare positively. The e¤ect of cooperatives on welfare proves more significant when goods are either complements or highly di¤erentiated and when competition is à la Cournot rather than à la Bertrand.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/03/just-one-of-us-consumers-playing-oligopoly-in-mixed-markets-.html

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