A carregar...
Publicação
Mergers of consumer cooperatives
| Nome: | Descrição: | Tamanho: | Formato: | |
|---|---|---|---|---|
| 810.23 KB | Adobe PDF |
Autores
Orientador(es)
Resumo(s)
Problem definition: Consumer cooperatives are consumer-owned and managed enterprises that aim to achieve buyer power and maximize their members' welfare. Recently, several cooperatives in major economies, such as the United Kingdom (UK), Italy, and Switzerland, have merged to increase their buyer power and provide lower prices for their members. We seek to understand how these mergers affect market outcomes and consumer welfare. Methodology/results: We build a game-theoretic model of a two-tier supply chain where multiple consumer cooperatives procure a product from a market on behalf of their member consumers. Multiple suppliers produce for this market and can increase their supply by incurring a scale-up cost. We show that mergers of cooperatives reduce the wholesale price, as intended. This enables consumers to allocate more of their income to purchasing other goods, which improves consumer welfare. However, the lower price also induces suppliers to reduce their production quantities, thereby causing each consumer to receive less of the supplied product, which reduces consumer welfare. We find that this underproduction is even more pronounced in industries with low scale-up costs. Thus, we show that mergers harm all consumers when the pre-merger number of cooperatives or the production scale-up cost is below a certain threshold. Otherwise, mergers benefit all consumers. We expand our results by considering horizontally and vertically differentiated cooperatives and show that our main results are robust. We also show that greater differentiation among cooperatives increases the benefit of mergers. Managerial implications: Mergers of cooperatives make a nuanced impact on consumer welfare due to their effect on wholesale prices and production incentives. Policymakers should maintain healthy competition among cooperatives to maximize consumer welfare, especially in markets with low production scale-up costs.
Descrição
Palavras-chave
Cooperatives Game theory Market game Non-profit management Supply chain management
Contexto Educativo
Citação
Khorasani, S., & Korpeoglu, G. (2024). Mergers of consumer cooperatives. (pp. 1-48). SSRN. https://doi.org/10.2139/ssrn.5016968
Editora
SSRN
Licença CC
Sem licença CC