A Theory of the Labor-Managed Firm Embedded in Popular Culture

Marthe Nyssens and Bruno Van der Linden

No 1996005, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This article develops a (partial equilibrium) microeconomic theory of popular-economy organizations (PEOs). Motivated by empirical data on PEOs in Santiago de Chile, we show that they are labor-managed firms (LMFs) embedded in dense social networks where cooperation between worker-members plays a central role. Starting from LMF models where worker-members share the risk of layoffs, we introduce the role of cooperation and possible dimensions of embeddedness (compensations of laid-off members, absence of two-tier contracts, permanent membership) in a static and a dynamic framework. We take advantage of the close connection between the representation of the LMF and the literature on efficient contracts in unionized capital-managed firms. We compare our results with traditional LMFs and profit-maximizing firms (PMFs) models.

Pages: 24
Date: 1996-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1996005

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