Asymmetric Information and the Form of Enterprise: Capitalist Firms and Consumer Cooperatives
AbstractThis paper examines the implication of different enterprise forms -- capitalist firm and consumer cooperative -- for the level of accident risks, assuming informational asymmetry between the firm and the outside trader. Our conclusion is that, in order to reduce accident risks, we should choose an enterprise form that gives the firm's management rights to those who would incur the most substantial loss in case of an accident. This result depends upon how effectively the mechanism of signaling works under the firms, given a certain distribution of expected losses over individuals.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 163 (2007)
Issue (Month): 2 (June)
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Web page: http://www.mohr.de/jite
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- D18 - Microeconomics - - Household Behavior - - - Consumer Protection
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- P12 - Economic Systems - - Capitalist Systems - - - Capitalist Enterprises
- P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises
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- Mikami, Kazuhiko, 2010. "Capital procurement of a consumer cooperative: Role of the membership market," Economic Systems, Elsevier, vol. 34(2), pages 178-197, June.
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