Welfare Enhancing Coordination in Consumer Cooperatives under Mixed Oligopoly.

The aim of this paper is to study the welfare e¤ects of consumer cooperatives in mixed oligopoly markets. We show that under decreasing returns to scale and su¢ ciently high market competition these …rms can contribute more to social welfare when acting on behalf of all consumers rather than only one representative consumer. This is because, by coordinating the preferences of consumers, these …rms reduce their excessive market output, helping the market to come closer to the …rst-best. In all other cases we show that such consumers coordination is not required to improve welfare.