IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-349-11530-3_9.html
   My bibliography  Save this book chapter

A Discriminating Share System

In: Share Systems and Unemployment

Author

Listed:
  • Franco Cugno

    (University of Torino)

  • Mario Ferrero

    (University of Trieste)

Abstract

The discussion in previous chapters has driven us to the conclusion that a revenue sharing system is fundamentally unstable: as the share contract is not a privately optimal contract, it has an inbuilt tendency to degenerate into a de facto wage system which preserves only the façade of a sharing arrangement but none of its hoped-for macroeconomic properties. The underlying reason is that it is not possible (and arguably, in some respects, not even desirable) to crush the insiders’ power from the outside, that is, to implement that complete divorce between sharing in income and sharing in decisions that is a prerequisite for the proper working of Weitzman’s model. If we could trust compensation parameters to become perfectly flexible, as in Weitzman’s long run, then they would always find their efficient equilibrium values, and, as we showed in Chapter 6, employment-restraining agreements would no longer be feasible — but then there would no longer be any reason to search for sharing arrangements. We must rather come to terms with the fact that compensation parameters are embedded in contracts at least in the short run, and these contracts cannot but reflect the employed workers’ bargaining power. Can a compensation arrangement be devised which mimics parameter flexibility but at the same time somehow makes allowance for the hard fact of insider power?

Suggested Citation

  • Franco Cugno & Mario Ferrero, 1991. "A Discriminating Share System," Palgrave Macmillan Books, in: Share Systems and Unemployment, chapter 9, pages 97-110, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-11530-3_9
    DOI: 10.1007/978-1-349-11530-3_9
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-349-11530-3_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.