Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination

Abstract

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. [ABSTRACT FROM AUTHOR] Copyright of Journal of Business is the property of University of Chicago Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)