Employee Control and Oligopoly in a Free Market Economy
AbstractWe study duopolistic markets where a profit-maximizing firm competes with an employee-controlled firm that maximizes value-added per employee. We first study an industry with Cournot competition. We show that the presence of an employee-controlled firm does not affect the equilibrium number of firms, lowers aggregate output, increases price and reduces social welfare. The employee-controlled firm has a smaller equilibrium output than its competitor. For Hotelling type competition in a market with diversified products, we show that equilibrium locations are not affected by employee control, that prices increase and that social welfare decreases. The market share of the employee-controlled firm is lower than that of its competitor. Surprisingly, the profits of both firms can increase when control is transferred from stockholders to employees in one of them. Finally, we show that employees would not want to buy a firm from its owners.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Toulouse 1 Capitole in its series Open Access publications from University of Toulouse 1 Capitole with number http://neeo.univ-tlse1.fr/633/.
Date of creation: Mar 1994
Date of revision:
Publication status: Published in Annales d'Économie et de Statistique (1994-03) v., p.29-50
Contact details of provider:
Web page: http://www.univ-tlse1.fr/
Other versions of this item:
- Helmuth CREMER & Jacques CRÉMER, 1994. "Employee Control and Oligopoly in a Free Market Economy," Annales d'Economie et de Statistique, ENSAE, issue 33, pages 29-49.
- Cremer, Helmuth & Crémer, Jacques, 1992. "Employee Control and Oligopoly in a Free Market Economy," IDEI Working Papers 11, Institut d'Économie Industrielle (IDEI), Toulouse.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Mikami, Kazuhiko, 2003. "Market power and the form of enterprise: capitalist firms, worker-owned firms and consumer cooperatives," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 533-552, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Main contact person).
If references are entirely missing, you can add them using this form.