On the Neutrality of Asset Ownership for Work Incentives
AbstractTwo ownership systems are compared: one where outsiders own the physical assets of firms and another where these assets are jointly owned by workers. Effort and side payments are self-enforced. Market-wide incentive constraints lead to restrictions on the distribution of profit between capital and labor which differ for the two systems. But these asymmetries are exactly offset by the bundling of input returns in a joint ownership economy, so for any self-enforcing equilibrium on the second-best frontier of one system there exists an equivalent equilibrium on the frontier of the other. An efficient outside ownership economy cannot be destabilized by spontaneous transitions to joint ownership or conversely. When capital is scarce, welfare maximization requires that all profit go to workers, but when labor is scarce all profit should go to asset owners.
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Bibliographic InfoPaper provided by Department of Economics, Simon Fraser University in its series Discussion Papers with number dp99-1.
Length: 31 pages
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
Web page: http://www.sfu.ca/economics.html
More information through EDIRC
Postal: Working Paper Coordinator, Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
Other versions of this item:
- Dow, Gregory K., 2000. "On the Neutrality of Asset Ownership for Work Incentives," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 581-605, September.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Optimal Team Contracts,"
9306, University of Waterloo, Department of Economics.
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dp00-16, CRABE, Department of Economics, Simon Fraser University, revised Aug 2000.
- Chang, Juin-jen & Lai, Ching-chong & Lin, Chung-cheng, 2003. "Profit sharing, worker effort, and double-sided moral hazard in an efficiency wage model," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 75-93, March.
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