American Economic Review Vol. 83 No. 1 1993
Why Capital Hires Labor: A Bargaining Perspective
Abstract
Organizational forms often serve as vehicles for the appropriation of quasi-rent. Capitalist firms typically emerge when production requires noncontractible investments in specific physical assets, because worker control would divert quasi-rents away from asset owners ex post. Conversely, labor-managed firms tend to emerge in niches requiring specialized human capital but general-purpose physical assets. A key result is that capitalist firms can persist in competitive markets even when labor-managed firms would yield a larger total surplus.
- Volume
- 83
- Issue
- 1
- Pages
- 118-134
- Sources
- bibtex:phds-export.bib