Modifications of the Basic Model

  • Frank H. Stephen


The literature on the economics of the labour-managed firm has developed considerably since the original presentation of what has been called in the previous chapter the W-V-M model. Some authors have presented more formal proofs of the properties of the W-V-M model (for example, Maurice and Ferguson, 1972; Dreze, 1976; Pearce, 1977; Meade, 1979), but a major preoccupation has been the identification of circumstances under which the ‘perverse’ short-run supply response, which is characteristic of the basic model, disappears. In this chapter, the latter developments are considered in three broad groupings, i.e. those which consider:
  1. (1)

    a supply curve of labour which is less than infinitely elastic;

  2. (2)

    institutional arrangements which neutralise, if not reverse, the ‘perverse’ supply response;

  3. (3)

    alternatives to income per worker as the maximand.



Utility Function Labour Force Supply Curve Indifference Curve Absolute Risk Aversion 
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Copyright information

© Frank H. Stephen 1984

Authors and Affiliations

  • Frank H. Stephen
    • 1
  1. 1.University of StrathclydeGlasgowUK

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