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Competitive advantages of cooperation

Evidence of advantages that cooperative business models can offer

Addressing market failure

  • Hueth (2014)
  • Nourse (1922, 1942)

Commitment of users

  • Albæk and Schultz (1998), abstract: “the fact that farmers in a cooperative individually decide how much to supply to the cooperative may serve as a commitment device for credibly (and profitably) gaining market share in competition with a profit maximizing firm”
  • Dal Bó (2010)
  • Hueth (2014)
  • Markussen et al (2014) - refers to “democratic dividend”

Community benefit

Information sharing

  • Banerjee et al (2004)
  • Bogetoft (2005), abstract: “when marginal costs are uncorrelated, the market for final goods is competitive, and the market for processing is non-competitive, the socially optimal production levels are sustained by a cooperative and a cooperative only”
  • Guinnane (2001)

Leaner startup costs

  • Hueth (2014)

Lower rates of failure

  • See list in EP footnote
  • Credit union report
  • Molk (2014), 941: “the limited empirical studies on cooperative ownership versus investor ownership performance generally suggest cooperatives have lower failure rather than comparable investor-owned rivals”; later attributes this, possibly, to the greater difficulty of cooperative startups, weeding out inefficient models

Productivity benefits

  • Molk (2014), 941: “cooperatives broadly have higher measures of productivity than comparable investor-owned firms”; later attributes this, possibly, to the greater difficulty of cooperative startups, weeding out inefficient models

Protection from exploitation

  • Hansmann (2000)

Resilience in economic hardship

  • Economist (2009): the perseverance of Mondragon during the recession

Transaction cost

  • Hansmann (2000)
  • Hueth (2014)

Vertical integration

  • Molk (2014), 912: “At a basic level, all cooperatives accomplish vertical integration, coupling the firm with an upstream (supplier/producer) or downstream (consumer) process. Because of this vertical integration, the cooperative captures the profits ordinarily accruing to the upstream or downstream process.”

Works cited

See also