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Partecipazione con avversione al rischio e coordination failures: riconsiderazione e tentativo di sintesi dei modelli di Weitzman e Meade

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  • Giulio Zanella

    (Università degli Studi di Siena)

Abstract

Recently, within several debates, the idea of a participatory economy has been recovered as a viable solution towards labour and firm’s costs flexibility to cope with unemployment and the increasingly competitive economic environment. This paper is an attempt to integrate the main recent models of participatory economy, i.e. Weitzman’s share economy and Meade’s partnership economy. This in order to throw light on some microeconomic conditions which appear to be not thoroughly examined and which could make not smoothly viable the path of a share economy. We introduce workers’ risk aversion in Weitzman’s model showing that with Von Neuman-Morgestern utility, worker’s preference for a share contract rather than a traditional wage one depends on the (mainly subjective) probability of unemployment in the two systems and that a risk premium may emerge which increases marginal cost of labour in a share system. On the other hand the firm would prefer the share solution only if an improvement in its expected revenue occurs as a consequence of it, e.g. through higher labour productivity or lower transaction costs. The increase in expected revenue must be sufficient to finance the risk premium through the whole lenght of the share labour contract. Since this condition could be hard to come true (inreasingly with the degree of participation) and thus Weitzman’s share economy not viable in a risk-aversion world, we argue that Meade’s model (which includes some degree of management sharing) is a good solution to “institutionalise” the risk premium. We show the intrinsic equivalence — with respect to labour compensation — of the two models, a property which allows the integration to solve the risk problem. However a fundamental difference arises within the sphere of property rights, an aspect wich is deepened in the appendix. Finally, using a game-theoretical framework, we analise the strategic aspects of firm’s choice for a participatory or a traditional wage model, obtaining a set of conditions on relative profits and labour demanded which helps to understand when and where a share economy may arise. We conclude stressing that, even if every condition regarding workers’ and firms’ preferences for a share solution were satisfied, a share economy needs the development of some kind of permanent training system, in order to provide workers with indispensable competences (cultural and professional) vitally to the working of a share system where risk were institutionally offset through participation to management as well.

Suggested Citation

  • Giulio Zanella, 2001. "Partecipazione con avversione al rischio e coordination failures: riconsiderazione e tentativo di sintesi dei modelli di Weitzman e Meade," Rivista di Politica Economica, SIPI Spa, vol. 91(1), pages 119-156, January.
  • Handle: RePEc:rpo:ripoec:v:91:y:2001:i:1:p:119-156
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    References listed on IDEAS

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    1. Felix R. FitzRoy & Kornelius Kraft, 1987. "Cooperation, Productivity, and Profit Sharing," The Quarterly Journal of Economics, Oxford University Press, vol. 102(1), pages 23-35.
    2. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    3. Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
    4. Shapiro, Matthew, 1986. "Capital and saving in a share economy," Journal of Comparative Economics, Elsevier, vol. 10(4), pages 444-447, December.
    5. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    6. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
    7. Wadhwani, Sushil & Wall, Martin, 1990. "The Effects of Profit-Sharing on Employment, Wages, Stock Returns and Productivity: Evidence from UK Micro-data," Economic Journal, Royal Economic Society, vol. 100(399), pages 1-17, March.
    8. Kruse, Douglas L, 1992. "Profit Sharing and Productivity: Microeconomic Evidence from the United States," Economic Journal, Royal Economic Society, vol. 102(410), pages 24-36, January.
    9. Derek C. Jones & Jeffrey Pliskin, 1988. "The Effects of Worker Participation, Employee Ownership and Profit Sharing on Economics Performance: A Partial Review," Economics Working Paper Archive wp_13, Levy Economics Institute.
    10. Cooper, Russell, 1986. "Share contracts and macroeconomic externalities," Journal of Comparative Economics, Elsevier, vol. 10(4), pages 421-426, December.
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    Cited by:

    1. Gaetano Cuomo, 2015. "Imprese cooperative e democrazia economica," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2015(116), pages 5-38.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms

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