Is there a co-operative advantage? Experimental evidence on the economic and non-economic determinants of demand

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6 Citations (Scopus)

Abstract

Focusing on consumer co-operatives, I test the conventional economic worldview that relative price is a main determinants of consumer behaviour using survey instruments in a classroom setting. I examine the role which non-economic variables such as 'warm glow' might play in determining demand. My findings challenge the narrow economic worldview that only economic variables count; but support a core assumption that economic variables are of fundamental importance to individual's choice decisions. Significantly, individuals are willing to pay higher prices for co-operative products even if they are not co-op members. However, as the price of co-operative products increases relative to the products of non-co-operatives, demand falls amongst both non-members and members of co-operatives. But demand is more inelastic for co-op members. When price is the same for co-ops and non-co-op, even non-co-ops members prefer to purchase products sold by co-operatives. The co-operative advantage provides co-ops with a protective belt against competition from non-cooperatives. This also speaks to the potential strength of consumer co-ops in competitive markets. Firms that invest in both economic and non-economic determinants of consumer demand, should be characterized by a significant competitive advantage.

Original languageEnglish
Pages (from-to)66-75
Number of pages10
JournalJournal of Co-operative Organization and Management
Volume4
Issue number2
DOIs
Publication statusPublished - Dec 2016

Keywords

  • Choice theory
  • Co-operative advantage
  • Co-operatives
  • Survey experiment
  • Warm glow
  • Welfare improvement

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