Abstract: In this paper, their results are extended in a number of ways. First for the entire economy, the welfare-maximizing properties of the Anderson, Porter, and Maurice (APM) solution are shown to depend on the number of consumer cooperatives and the number of members in the cooperatives relative to the number of nonmembers. When only one cooperative is formed, the APM solution may or may not yield an economy-wide welfare maximum in spite of the fact that each member is enjoying maximum benefits. Therefore, an alternative formulation is provided that ensures an economy-wide welfare maximum. Second, when multiple cooperative form, the APM solution is likely to yield a welfare maximum, although the cooperatives may or may not be stable in the sense that members may continually have incentives to transfer among the cooperatives. If the total of the collective is maximized, the consumer-managed firm will not reach the same long-run equilibrium as the perfectly competitive firm, because the optimal effective price of q is greater than minimum average cost. When multiple cooperatives form, average utility is maximized, and the number of cooperatives divides evenly into the population (i.e., no integer problem), the consumer-managed firm then reaches the perfectly competitive long-run equilibrium as characterized by price equals minimum average cost. Although APM analysis is correct for the problem that they examined, the analysis here has extended their study. In particular, this paper has shown that the pricing an membership decisions for the consumer cooperative are responsive to the following: the maximizing viewpoint, whether equal cost sharing is required, the number of cooperatives, and the ratio of population to the number of cooperatives. By introducing the number of cooperatives, this paper has analyzed whether memberships of the cooperatives will be stable or unstable.

　　Subjects: CONSUMER cooperatives; EQUILIBRIUM (Economics); PRICING