35-53

• Brada, Josef C.
• Méndez, José A.

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.

• Economics and Business
• Computer and information sciences

• Labor economics
• Production functions (Economic theory)
• Comparative economics
• Statistics

labor managed firms, cooperatives, effort, incentives, competition, efficiency of firms

Περιέχει πίνακα, σημειώσεις και βιβλιογραφία, We are grateful to the Editor, Theodore Lianos, for helpful comments. Méndez acknowledges financial support from the W.P. Carey School of Business, Arizona State University., JEL classification : D23, D24, O13, P50.