TY - JOUR
T1 - The power of co-operatives
T2 - Converting monopolists into self-regulating and efficient organisations
AU - Altman, Morris
PY - 2021/12
Y1 - 2021/12
N2 - The conditions under which co-operative monopolies can be self-regulating in the sense of behaving similarly (at a minimum) to an efficiently regulated monopoly are modelled in this paper. I argue that an employee-owned or workers’ co-operative monopoly can be expected to operate similarly to an investor-owned monopoly generating relative high prices and lower levels of output and producing deadweight losses. But such a co-operative would be relatively more x-efficient because of its incentive environment. I argue, however, that a multi-stakeholder co-operative, incorporating the preferences of consumers and other stakeholders, can be expected to behave similarly (at a minimum) to an efficiently regulated monopoly, whilst generating a higher level of x-efficiency than the investor-owned monopoly and a more equitable distribution of income. Critical to this argument is the quality of governance of the co-operative and the inability of the executive of the co-operative to capture the decision-making goals and objectives from the collective. Such ‘co-operative capture’ would lead to a failure in co-operative governance resulting in co-operative outcomes converging to those of unregulated investor-owned firms.
AB - The conditions under which co-operative monopolies can be self-regulating in the sense of behaving similarly (at a minimum) to an efficiently regulated monopoly are modelled in this paper. I argue that an employee-owned or workers’ co-operative monopoly can be expected to operate similarly to an investor-owned monopoly generating relative high prices and lower levels of output and producing deadweight losses. But such a co-operative would be relatively more x-efficient because of its incentive environment. I argue, however, that a multi-stakeholder co-operative, incorporating the preferences of consumers and other stakeholders, can be expected to behave similarly (at a minimum) to an efficiently regulated monopoly, whilst generating a higher level of x-efficiency than the investor-owned monopoly and a more equitable distribution of income. Critical to this argument is the quality of governance of the co-operative and the inability of the executive of the co-operative to capture the decision-making goals and objectives from the collective. Such ‘co-operative capture’ would lead to a failure in co-operative governance resulting in co-operative outcomes converging to those of unregulated investor-owned firms.
UR - https://www.ukscs.coop/resources/journal-of-co-operative-studies-vol-54-no-3
M3 - Article
SN - 0961-5784
VL - 54
SP - 23
EP - 32
JO - Journal of Co-operative Studies
JF - Journal of Co-operative Studies
IS - 3
ER -