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Equivalence between Labour-Managed Economy and Capitalist Economy and Firms' Indivisibility

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  • JOUVET, Pierre-André

    (GREQAM-LEQAM, UMR CNRS 9990, Université de la Mediterranée (Aix- Marseille II.))

Abstract

The critical role of free entry to correct inherent deviance behavior has been stressed by Vanek (1970), Meade (1972) amongst others. The equivalence theorem (Drèze (1976)) defines that labour and entrepreneurial management both lead to the same Pareto optimal equilibrium provided that there is perfect competition and perfect mobility of factors. Nevertheless) if we consider the number of firms to be an integer, the labour market admits two kinds of equilibria but the maximizing profit economy only one. Thus, there no longer exists an equivalence between the two economies.

Suggested Citation

  • JOUVET, Pierre-André, 1996. "Equivalence between Labour-Managed Economy and Capitalist Economy and Firms' Indivisibility," LIDAM Discussion Papers CORE 1996002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1996002
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1996.html
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