Why labor-managed firms may not be socially desirable

Ohnishi, Kazuhiro (2025): Why labor-managed firms may not be socially desirable.

Abstract

We employ a game-theoretic model to analyze five duopoly regimes: (1) state-owned and labor-managed firms, (2) labor-managed firms, (3) state-owned and capitalist firms, (4) capitalist firms, and (5) capitalist and labor-managed firms. We compare the welfare outcomes across these regimes and find that labor-managed firms may not be socially desirable due to their adverse impact on economic welfare. This may help explain why labor-managed firms are relatively rare compared to capitalist firms.

• Item Type: MPRA Paper
• Language: English
• Keywords: Capitalist firm; Cournot model; Economic welfare; Labor-managed firms; State-owned firm
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises ; Public-Private Enterprises

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