On the optimal production and location of a labor-managed firm

Hong Hwang (), Chao-cheng Mai () and Yan-Shu Lin ()
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Hong Hwang: Department of Economics, National Taiwan University, Taipei, Taiwan 100
Chao-cheng Mai: Chung-Hua Institution for Economic Research, Taipei, Taiwan 106
Yan-Shu Lin: The Institute of Economics, Academia Sinica, Nankang, Taipei, Taiwan 115

The Annals of Regional Science, 2001, vol. 35, issue 2, 217-226

Abstract: This paper endeavors to introduce space into the theory of the Labor-Managed firm (LMF) and to investigate its optimal production and location decisions. It is shown that the degree of returns to scale plays a key role in the determination of optimal production and location for an LMF, in particular, that the optimal location of an LMF is farther away from (closer to) the market as compared to a profit-maximizing firm (PMF) if the production function is of increasing (decreasing) returns to scale. We also demonstrate that the optimum location of an LMF moves closer towards the market as demand increases, regardless of whether the production function is of increasing or decreasing returns to scale. This finding is in sharp contrast with that in a capitalist economy.

JEL-codes: D21 (search for similar items in EconPapers)
Date: 2001-06-18
Note: Received: February 2000/August 2000
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Citations: View citations in EconPapers (2)

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