Stable producer co-operatives in competitive markets
An argument often adopted to explain the relatively scarce presence of Producer Co-operatives (PCs) in Western capitalist economies is the instability that may affect this type of firm during the positive phases of the business cycle. In a nutshell the argument is that in profitable industries PCs can have an incentive to hire fixed-wage workers to replace the relatively more expensive firm's members. The paper shows that this phenomenon can fail to hold in very competitive and low barrier-to-entry markets in which, potentially, dismissed members have a chance to set up new firms. Furthermore, since some basic results on PC's stability are due to the assumption of an exogenous equilibrium wage as opposed to an endogenous PC's payoff, the paper attempts to remove this assumption. Two main insights are thus provided. Firstly, that workers possess an incentive to set up PCs only under specific circumstances. Secondly, that once PCs enter a market, conditions exist under which they are stable against the temptation to dismiss members to hire fixed-wage workers.
|Date of creation:||1998|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marco, Marini, 1997.
"Managers Compensation and Collusive Behaviour under Cournot Oligopoly,"
31871, University Library of Munich, Germany.
- MARINI, Marco, 1998. "Managers compensation and collusive behaviour under Cournot oligopoly," CORE Discussion Papers 1998002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Derek C. JONES, 1975. "British Producer Cooperatives And The Views Of The Webbs On Participation And Ability To Survive," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 46(1), pages 23-44, 01.
- MARINI, Marco & ZEVI, Alberto, 1995.
"The Reform of the Western European Cooperative Legislation : A First Assessment from a Bargaining Point of View,"
CORE Discussion Papers
1995022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Marini Marco & Zevi Alberto, 1998. "The Reform of the Western European Co-operative Legislation: a First Assessment from a Bargaining Point of View," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 83-104.
- Ben-ner, Avner, 1984. "On the stability of the cooperative type of organization," Journal of Comparative Economics, Elsevier, vol. 8(3), pages 247-260, September.
- Bruno Jossa & Gaetano Cuomo, 1997. "The Economic Theory of Socialism and the Labour-managed Firm," Books, Edward Elgar, number 1091, March.
- Ben-Ner, Avner, 1988. "Comparative empirical observations on worker-owned and capitalist firms," International Journal of Industrial Organization, Elsevier, vol. 6(1), pages 7-31, March.
- Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-320, September.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:31925. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.