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On the optimal production and location of a labor-managed firm

Author

Listed:
  • Hong Hwang

    (Department of Economics, National Taiwan University, Taipei, Taiwan 100)

  • Chao-cheng Mai

    (Chung-Hua Institution for Economic Research, Taipei, Taiwan 106)

  • Yan-Shu Lin

    (The Institute of Economics, Academia Sinica, Nankang, Taipei, Taiwan 115)

Abstract

This paper endeavors to introduce space into the theory of the Labor-Managed firm (LMF) and to investigate its optimal production and location decisions. It is shown that the degree of returns to scale plays a key role in the determination of optimal production and location for an LMF, in particular, that the optimal location of an LMF is farther away from (closer to) the market as compared to a profit-maximizing firm (PMF) if the production function is of increasing (decreasing) returns to scale. We also demonstrate that the optimum location of an LMF moves closer towards the market as demand increases, regardless of whether the production function is of increasing or decreasing returns to scale. This finding is in sharp contrast with that in a capitalist economy.

Suggested Citation

  • Hong Hwang & Chao-cheng Mai & Yan-Shu Lin, 2001. "On the optimal production and location of a labor-managed firm," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(2), pages 217-226.
    • Handle: RePEc:spr:anresc:v:35:y:2001:i:2:p:217-226
    Note: Received: February 2000/August 2000
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    Citations

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    Cited by:

    1. Carmen GUZMAN & Francisco J. SANTOS & María de la O BARROSO, 2020. "Cooperative Essence And Entrepreneurial Quality: A Comparative Contextual Analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(1), pages 95-118, March.
    2. Bar-Shira, Ziv & Finkelshtain, Israel & Simhon, Avi, 2006. "Competitive Equilibrium of an Industry with Labor Managed Firms and Price Risk," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 34(1), pages 1-23.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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