Social Benefits of Cooperatives - An Economic Perspective

Abstract Why and how are cooperatives beneficial to society? The answer is simple: first and foremost, because they are useful for the members. Cooperatives enable them to cooperate and operate economically. Members benefit because they can pool resources, save on transaction costs and hold their own against companies with market power. The purpose and democratic governance protect against exploitation, even in the face of the high opportunity cost of terminating membership. What should the state do? Cooperatives should be supported by structuring their legal form in a way that is appropriate to their purpose and practical. Financial support for cooperatives is recommended if external effects are internalized or more targeted alternative redistribution instruments do not exist.