The Labor-Managed Firm: Permanent or Start-Up Subsidies?. Issue 4 (2nd October 2017)

• Record Type: Journal Article
• Authors: Groot, Loek; van der Linde, Daan
• Is Part Of: Journal of economic issues. Volume 51:Issue 4(2017)
• Page Start: 1074
• Page End: 1093
• Publication Date: 2017-10-02
• Subjects: cooperatives -- ESOP -- game theory -- labor-managed firm -- profit sharing; J33 -- J38 -- J54 -- P13; Economics -- Periodicals; Economics; Économie politique -- Périodiques; Economie; ECONOMICS; ECONOMIC POLICY; Periodicals; 330.05
• DOI: 10.1080/00213624.2017.1391592
• Languages: English
• ISSNs: 0021-3624

Abstract

Abstract: We explore a new argument that seeks to explain the near absence of the labor-managed firm or cooperative, despite a range of inefficiencies attributed to the present-day capitalist firm. We derive the crucial condition for the emergence of labor-managed firms and show that it is unduly restrictive from an efficiency point of view. The policy implication is that public intervention to promote labor-managed firms should primarily be in the form of start-up subsidies rather than in providing permanent tax subsidies.