Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189389 
Year of Publication: 
2006
Series/Report no.: 
Queen's Economics Department Working Paper No. 1113
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
If consumers wholly or partially control a firm with market power they will charge less than the profit maximising price. Starting at the usual monopoly price, a small price reduction will have a second order effect on profits but a first order effect on consumer surplus. Despite this desirable static result, it has been argued that cooperatives are vulnerable to take-over by outsiders who will run them as for-profit businesses. This paper studies takeovers of cooperatives. We argue that cooperatives are in fact quite stable due to the Grossman-Hart problem of free riding during takeovers.
Subjects: 
corporate governance
co-operative
take-over
free-rider
JEL: 
D70
L20
Document Type: 
Working Paper

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