Author
Listed:
- Thomas Brzustowski
- Francesco Caselli
Abstract
We develop and formalise an equilibrium concept for a dynamic economy in which production takes place in worker cooperatives. The concept rules out allocations of workers to cooperatives in which a worker in one cooperative could move to a different cooperative and make both herself and the existing workers in the receiving cooperative better off. It also rules out allocations in which workers in a cooperative would be made better off by some of the other workers leaving. We also provide a minimum-information equilibrium-selection criterion, which refines our equilibrium concept. We illustrate the application of our concept and refinement in the context of an overlapping-generation economy with specific preferences and technology. The cooperative economy follows a dynamic path qualitatively similar to the path followed by a capitalist economy, featuring gradual convergence to a steady state with constant output. However, the cooperative economy features a static inefficiency, in that, for a given aggregate capital stock, firm size is smaller than what a social planner would choose. On the other hand, the cooperative economy cannot be dynamically inefficient and could accumulate capital at a rate that is higher or lower than the capitalist economy. As a result, steady-state income per worker could be higher or lower in the cooperative economy. We also present an illustrative calibration, which quantitatively compares steady-state incomes and welfare in a cooperative and in a capitalist economy.
Suggested Citation
Thomas Brzustowski & Francesco Caselli, 2025.
"Economic Growth in a Cooperative Economy,"
Journal of the European Economic Association, European Economic Association, vol. 23(3), pages 845-890.
Handle:
RePEc:oup:jeurec:v:23:y:2025:i:3:p:845-890.
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