Though it is routinely posited that organizations with different property rights will not exhibit the same responses to changes in their economic environment, compelling evidence of such behavior is difficult to find. We collected observations on two types of firms--conventional proprietorships and worker-owned cooperatives--operating in the same industry, in the same location, and at the same period of time. We compare the firms' reactions to changes in their input and output prices and ask whether their reactions are consistent with orthodox models of profit and dividend maximization.

Using data collected by the authors on the largest and most durable of worker-owned firms in U.S. manufacturing, this paper is addressed to two questions. First, are the responses of cooperatives to changes in their economic environment different from those of conventional firms? It appears that cooperatives are more inclined to adjust pay than employment. Second, how profitable has membership in the cooperatives been? Using information on share prices, the authors find membership to have been extremely profitable and, in this sense, the prices of co-ops' shares have been underpriced. The riskiness of cooperative memberships is discussed.

Two models of wage and employment determination in unionized markets are routinely exposited. According to one, wage and employment outcomes are on the firm's labor demand curve; according to the other, wages and employment are on the partie' contract curve. This paper spells out an empirical procedure that discriminates between these two models and applies this procedure to the particular case of the newspaper industry and the International Typographical Union. The labor demand curve model is inconsistent with our data, while the contract curve model comes closer to describing our observations.