SUNK COSTS OF CAPITAL AND THE FORM OF ENTERPRISE: INVESTOR-OWNED FIRMS AND WORKER-OWNED FIRMS *
Kazuhiko Mikami and
Annals of Public and Cooperative Economics, 2010, vol. 81, issue 1, pages 77-104
This paper examines implications of sunk costs of capital for efficient forms of enterprise. It is assumed that firm owners and outside traders are asymmetrically informed of venture risks, and that there are sunk costs associated with investment in physical and human capital. We then make an efficiency comparison between investor-owned and worker-owned firms. We find that the firm is efficient when it is owned by the input supplier (the investor or worker) who incurs large sunk costs. This is because such an input supplier can credibly signal to the other input supplier that he in fact has a safe project. An empirical study based on the Japanese manufacturing industry seems to support the theoretical result. Copyright © 2010 The Authors Journal compilation © CIRIEC 2010.
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... &year=2010&part=null link to full text (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:bla:annpce:v:81:y:2010:i:1:p:77-104
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1370-4788
Access Statistics for this article
Annals of Public and Cooperative Economics is currently edited by Marco Marini
More articles in Annals of Public and Cooperative Economics from Wiley Blackwell
Series data maintained by Wiley-Blackwell Digital Licensing ().