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Asymmetric Information and the Form of Enterprise: Capitalist Firms and Consumer Cooperatives

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  • Kazuhiko Mikami

Abstract

This 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.

Suggested Citation

  • Kazuhiko Mikami, 2007. "Asymmetric Information and the Form of Enterprise: Capitalist Firms and Consumer Cooperatives," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 297-312, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200706)163:2_297:aiatfo_2.0.tx_2-g
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    References listed on IDEAS

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    1. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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    Cited by:

    1. Laura Abrardi & Luca Colombo & Pier Angelo Mori, 2016. "Customer Ownership And Quality Provision In Public Services Under Asymmetric Information," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1499-1518, July.
    2. Mikami, Kazuhiko, 2010. "Capital procurement of a consumer cooperative: Role of the membership market," Economic Systems, Elsevier, vol. 34(2), pages 178-197, June.
    3. Kazuhiko Mikami & Satoru Tanaka, 2008. "Food Processing Business and Agriculture Cooperatives in Japan: Market Power and Asymmetric Information," Asian Economic Journal, East Asian Economic Association, vol. 22(1), pages 83-107, March.
    4. Kazuhiko Mikami & Satoru Tanaka, 2010. "Sunk Costs Of Capital And The Form Of Enterprise: Investor‐Owned Firms And Worker‐Owned Firms," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 81(1), pages 77-104, March.

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    More about this item

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • P12 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Enterprises
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises

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