Econometrica: Mar, 1977, Volume 45, Issue 2

Coalition Structure in a Labor-Managed Market Economy

https://doi.org/0012-9682(197703)45:2<341:CSIALM>2.0.CO;2-2
p. 341-360

Tatsuro Ichiishi

The purpose of this paper is to present a model which explains the formation of firms in a market economy. This is done by unifying two recent developments in economic theory: the labor-managed market economy and the coalition production economy. D. Sondermann's model [30] of a coalition production economy with "increasing returns to coalition" is generalized. Specifically, the concept of coalition structures is introduced, so that the model can be naturally interpreted to represent a labor-managed market economy. Two kinds of specific interpretation are considered: one is a type of socialistic economy and the other a capitalistic economy.