IDEAS home Printed from https://ideas.repec.org/a/cuf/journl/y2002v3i2p361-378.html
   My bibliography  Save this article

A Theory of Co-operatives Based on Rights

Author

Listed:
  • Thomas H. Noe

    (Tulane University)

  • Stephen D. Smith

    (Georgia State University and Federal Reserve Bank of Atlanta)

Abstract

We investigate the role of cooperatives in the allocation of risk across agents that we call workers and holders of capital. We show that, despite the inalienability of human capital (no forced labor) and limited liability on the part of all agents, financial coalitions can implement Pareto optimal inter temporal risk sharing services for both workers and holders of capital. We specifically show how optimality can be achieved in worker preferred equiliria if individual holders of capital collectivize and jointly hire workers, who are paid wages depending on the aggregate output of the coalition. Interestingly, we also provide an example where capital preferred equilibria do not provide for optimal risk sharing and re-negotiation proofness.

Suggested Citation

  • Thomas H. Noe & Stephen D. Smith, 2002. "A Theory of Co-operatives Based on Rights," Annals of Economics and Finance, Society for AEF, vol. 3(2), pages 361-378, November.
  • Handle: RePEc:cuf:journl:y:2002:v:3:i:2:p:361-378
    as

    Download full text from publisher

    File URL: http://www.aeconf.net/Articles/Nov2002/aef030204.pdf
    Download Restriction: no

    File URL: http://down.aefweb.net/AefArticles/aef030204.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    2. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
    3. Boyd, John H. & Prescott, Edward C., 1986. "Financial intermediary-coalitions," Journal of Economic Theory, Elsevier, vol. 38(2), pages 211-232, April.
    4. Douglas W. Diamond & Raghuram G. Rajan, 2001. "Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 287-327, April.
    5. Ram T. S. Ramakrishnan & Anjan V. Thakor, 1984. "Information Reliability and a Theory of Financial Intermediation," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 415-432.
    6. Robert M. Townsend, 1978. "Intermediation with Costly Bilateral Exchange," Review of Economic Studies, Oxford University Press, vol. 45(3), pages 417-425.
    7. Abhijit Banerjee & Dilip Mookherjee & Kaivan Munshi & Debraj Ray, 2001. "Inequality, Control Rights, and Rent Seeking: Sugar Cooperatives in Maharashtra," Journal of Political Economy, University of Chicago Press, vol. 109(1), pages 138-190, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Co-operatives; Rights;

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)

    Statistics

    Access and download statistics

    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:cuf:journl:y:2002:v:3:i:2:p:361-378. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao). General contact details of provider: http://edirc.repec.org/data/emcufcn.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.