THE EFFECT OF MARKETING COOPERATIVES ON COST-REDUCING PROCESS INNOVATION ACTIVITY



13


2ctψ+4tψ2+8ct2ψ2-t -2ctψpC+8t2ψ2pI+(8t2ψ2-2tψ-1)wC(1)

I(1)                                1612ψ2 - 4tψ -1

Regarding the co-op, its problem at this stage is to determine the price that maximizes the welfare
of its pre-innovation membership in both the pre- and post-innovation stages of the game, subject to
raising earnings that can be retained to finance its cost-reducing innovation in stage 2. The capital

x2

x C(1)

---an and the problem of the co-op
2
ψ


12
required for the subsequent investment in innovation is IC = — ψtC

at the pre-innovation stage can be expressed as:

(37)


max MW = MW11^ + MW (3/1) = ( wC (1)  c ) χC (1)  txCc (1) + ( pC  c + c ) xC (1)    x(' (1)

WC (1)                                                      2                     ψ                2

s.t.


ΠC(1)


IC0 =>( pC


-wC(1)


- c ) XC (1) - '   0

2ψ


where MW(1) is the welfare of the pre-innovation membership in stage 1. The optimality conditions for


the co-op’s optimization problem suggest that the co-op will find it optimal to choose its price such that
the investment constraint binds, i.e., the co-op will price its input so that it raises exactly the amount of
capital needed for its innovation activity in stage 2. The best response function of the co-op is then:

4tψpC+wI(1) -t(4cψ+1)

WC (1) =           4 tψ +1


The Nash equilibrium prices and quantities at the pre-innovation stage of the mixed oligopsony


are given by:


(38)


'    t-4t2ψ+(4tψ-3)pC+4tψpI

w (1) =             8tψ - 3


-c


(39)


'     8t2ψ2+4tψ-3+8tψ2(pI-pC)

x1 (1) =        ( 4 tψ +1)(8 tψ - 3)


4t-12t2ψ+(32t2ψ2-8tψ-3) pC+4tψpI

(40)   wCfn =--------------------—--------------------

C(1)               (4tψ+1)(8tψ-3)


(41)


`     8tψ[3>tψ -1 + ψ(PC - Pi )]

XC(1) =     (4tψ +1)(8tψ - 3)




More intriguing information

1. Does Competition Increase Economic Efficiency in Swedish County Councils?
2. The InnoRegio-program: a new way to promote regional innovation networks - empirical results of the complementary research -
3. Estimating the Technology of Cognitive and Noncognitive Skill Formation
4. Banking Supervision in Integrated Financial Markets: Implications for the EU
5. The name is absent
6. The name is absent
7. The name is absent
8. The name is absent
9. Managing Human Resources in Higher Education: The Implications of a Diversifying Workforce
10. I nnovative Surgical Technique in the Management of Vallecular Cyst
11. Locke's theory of perception
12. MULTIMODAL SEMIOTICS OF SPIRITUAL EXPERIENCES: REPRESENTING BELIEFS, METAPHORS, AND ACTIONS
13. THE CHANGING STRUCTURE OF AGRICULTURE
14. Accurate, fast and stable denoising source separation algorithms
15. Does South Africa Have the Potential and Capacity to Grow at 7 Per Cent?: A Labour Market Perspective
16. Firm Closure, Financial Losses and the Consequences for an Entrepreneurial Restart
17. Crime as a Social Cost of Poverty and Inequality: A Review Focusing on Developing Countries
18. The name is absent
19. Connectionism, Analogicity and Mental Content
20. Investment and Interest Rate Policy in the Open Economy