Technology, Effort and the Efficiency of Production: Labor-managed versus Capitalist Firms

Josef Brada and Jose Mendez ()

South-Eastern Europe Journal of Economics, 2009, vol. 7, issue 1, 35-53

Abstract: We explore how the modeling of effort as a factor in production affects the relative productivity of labor-managed and capitalist firms. Using simple models of privately-owned and labor-managed firms, we show that the more important the role of effort in production, the greater the differences in the efficiency of the two types of firms even if monitoring remains fixed. The results show that even minor differences in the extraction of effort can cause large changes in output and efficiency. We draw implications from our results for the viability of labor-managed firms and cooperatives.

Keywords: Labor Managed Firms; Cooperatives; Effort; Incentives; Competition; Efficiency of Firms (search for similar items in EconPapers)
JEL-codes: D23 D24 O13 P50 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:seb:journl:v:7:y:2009:i:1:p:35-53

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