Academic Articles & Papers

Cooperative Enterprise as an Antimonopoly Strategy

Open Markets Legal Director Sandeep Vaheesan and Nathan Schneider at the University of Colorado published a paper on the Pennsylvania State University Law Review on cooperative enterprise and its place in the antimonopoly tradition. They lay out the advantages of cooperative firms relative to investor-owned corporations and offer ideas on reforming antitrust to protect and promote cooperation.

November 20, 2019  |  by Open Markets

Abstract

After decades of neglect, antitrust is once again a topic of public debate. Proponents of reviving antitrust have called for abandoning the narrow consumer welfare objective and embracing a broader set of objectives. One essential element that has been overlooked thus far is the ownership structure of the firm itself. The dominant model of investor-owned business and associated philosophy of shareholder wealth maximization exacerbate the pernicious effects of market power. In contrast, cooperative ownership models can mitigate the effects of monopoly and oligopoly, as well as advance the interests of consumers, workers, small business owners, and citizens. The promotion of fair competition among large firms should be paired with support for democratic cooperation within firms.

Antitrust law has had a complicated history and relationship with cooperative enterprise. Corporations threatened by cooperatives have used the antitrust laws to frustrate the growth of these alternative businesses. To insulate cooperatives from the antitrust threat, Congress has enacted exemptions to protect cooperative entities, notably a general immunity for farm cooperatives in the 1922 Capper-Volstead Act. As part of an agenda to tame corporate monopoly, all three branches of the federal government and the states should revisit these ideas and seek to protect and enable the cooperative model across the economy. Although protections that farmers fought for a century ago may seem obsolete in an era of big-box retail and online platforms, matters of ownership design have at least as much relevance today and should be a part of the antimonopoly arsenal.

First published with the Penn State Law Review.

Read the full paper here.

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