"Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination"
by Jensen, Michael C; Meckling, William H (1979)
[We redefine the production function to incorporate its dependence on the structure of property and contracting rights within which the firm exists. The problems surrounding the role of labor in the firm for a variety of rights structures are analyzed recognizing this dependence. These structures include (1) the "labor-managed firm" system (in which common stock claims are legally prohibited), (2) the codetermination and industrial democracy movements (in which the law requires management participation by labor), (3) cooperatives and professional partnerships (i.e., quasi-labor-managed firms which arise out of voluntary contracting), and (4) the capitalist corporation. We criticize the claim that labor-managed firms are efficient.]
KeywordsLabor-Managed Firms, Firms, Codetermination, Rights, Production Function, Economics, Industrial Democracy, Pure-Rental Firms, Yugoslav-Type Firms, Soviet Firms, Cooperatives
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