Unfair division of gains under equal price in cooperative purchasing

Fredo Schotanus, Jan Telgen, L. de Boer

Research output: Chapter in Book/Report/Conference proceedingConference contributionAcademicpeer-review

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Abstract

Cooperative purchasing is becoming more and more common practice. However, many cooperative initiatives end prematurely or do not flourish. Important reasons indicated for these problems are directly or indirectly related to the unfair division of gains. The purpose of this paper is to indicate causes of unfairness effects in current cooperative practices, aiming to enhance cooperative trust and stability. Results incorporate an extensive analysis of the most commonly used allocation concept, the Equal Price. We prove that the unfair effects of this concept are caused by neglecting a part of the added value of cooperative initiative members. Moreover, we prove that the Equal Price allocation value reaches its maximum when the volume of an organisation equals a certain percentage of the total volume of a cooperative initiative. So, when using the Equal Price organizations increasing their volume past this point will receive less gains. We conclude by emphasizing that it is highly important that cooperative members are aware of allocation concept problems. Further research will involve solutions to these problems.
Original languageEnglish
Title of host publicationResearches in purchasing and supply management: proceedings of the 14th IPSERA Conference, Archamps, France
EditorsR. Calvi, N. Nerminod
Place of PublicationBudapest
PublisherIFPSM Summer School Secretariat
Pages135-144
Number of pages10
Publication statusPublished - 20 Mar 2005
Event14th Annual IPSERA Conference 2005: Researches in Purchasing and Supply Management - Geneva/Archamps, France
Duration: 20 Mar 200523 Mar 2005
Conference number: 14

Publication series

NameIFPSM publications
PublisherIFPSM Summer School Secretariat
Volume5

Other

Other14th Annual IPSERA Conference 2005
CountryFrance
CityGeneva/Archamps
Period20/03/0523/03/05

Keywords

  • Equal Price
  • Cooperative Purchasing
  • METIS-224397
  • Properties of Fairness
  • IR-52705
  • Allocation
  • Purchasing Consortia

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