The degeneration of workers' cooperatives under endogenous membership in mixed oligopoly

We propose a new model of mixed oligopoly where a workers’ cooperative firm competes with a number of profit-maximizing companies. Building upon a large empirical evidence, we innovate as compared to the traditional literature on the objective function of the cooperative; moreover, its membership is treated as endogenous in the Cournot–Nash equilibrium. We show which factors may be responsible for the degeneration of the workers’ cooperative firm, which occurs when the number of its members shrinks with respect to the overall employees.