IDEAS home Printed from
   My bibliography  Save this paper

Employee Control and Oligopoly in a Free Market Economy


  • Cremer, Helmuth
  • Crémer, Jacques


We study duopolistic markets where a profit-maximizing firm competes with an employee-controlled firm that maximizes value-added per employee. We first study an industry with Cournot competition. We show that the presence of an employee-controlled firm does not affect the equilibrium number of firms, lowers aggregate output, increases price and reduces social welfare. The employee-controlled firm has a smaller equilibrium output than its competitor. For Hotelling type competition in a market with diversified products, we show that equilibrium locations are not affected by employee control, that prices increase and that social welfare decreases. The market share of the employee-controlled firm is lower than that of its competitor. Surprisingly, the profits of both firms can increase when control is transferred from stockholders to employees in one of them. Finally, we show that employees would not want to buy a firm from its owners.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Cremer, Helmuth & Crémer, Jacques, 1992. "Employee Control and Oligopoly in a Free Market Economy," IDEI Working Papers 11, Institut d'Économie Industrielle (IDEI), Toulouse.
  • Handle: RePEc:ide:wpaper:4544

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    More about this item


    Access and download statistics


    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:ide:wpaper:4544. 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: (). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.