Review of Economic Studies Vol. 57 No. 3 1990
Workers Versus Firms: Bargaining Over a Firm's Value
Abstract
We introduce a distinction between a firm and its network of workers. In a competitive world, if networks are easily lured away, the workers must receive the entire value of their contribution to the firm. How then can service firms have equity value? A model is analysed in which workers are paid less as a group than their value, even in a competitive world. The workers are assumed to have a nonwage benefit for working at the current firm; this benefit is privately known. These privately known benefits make it impossible for the workers to agree on a division of their value should they leave the existing firm for a new enterprise. The result is that the workers may receive a total compensation that is less than their contribution to the firm.
- DOI
- 10.2307/2298019
- Volume
- 57
- Issue
- 3
- Pages
- 369
- Sources
- bibtex:phds-export.bib openalex crossref