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dc.contributor.authorJoshi, Sumiten
dc.contributor.authorSmith, Stephen C.en
dc.date.accessioned2011-12-14T09:46:10Z-
dc.date.available2011-12-14T09:46:10Z-
dc.date.issued2002-
dc.identifier.isbn9291902993en
dc.identifier.urihttp://hdl.handle.net/10419/53021-
dc.description.abstractThis paper develops a theory of endogenous league formation and considers its implications for policy in developing countries. We generalize from features of the two most prominent European co-op leagues, Mondragón and La Lega, to develop the first formal model of the endogenous formation of co-operative networks and their constituent member coops. We show that if co-op leagues are formed through an open membership game, there can be two Nash equilibria, one with and one without a co-op league; and in this case, the equilibrium with a co-op league Pareto dominates the latter. In examining the formation of constituent co-operative firms, we show that, when payoffs to joining a co-op for potential worker members are initially increasing in membership and then decreasing, the outcome of the game depends on the rules of co-op formation. If payoffs are equal to the alternative wage at a single, unique membership size, then open membership and exclusive membership rules of the game yield the same outcome that either no co-op will be formed, or all co-ops formed will have the same number of members; but the coalition unanimity game has a unique outcome with co-op formation. If worker member payoffs exceed the alternative wage, our three alternative rules of co-op formation yield different outcomes. In the open membership game where some workers work for conventional firms, coops will be formed at the largest size for which co-op payoffs are equal to the alternative wage. However, if co-op payoffs exceed the conventional wage only when all workers join coops, then equilibrium co-op sizes can potentially include a wide range of membership sizes. In the exclusive membership game, all co-op sizes in the interval for which co-op payoffs are at least as large as conventional wages are equilibria. Finally, in the coalition unanimity game, only co-op sizes at which the highest income per member is achieved are equilibria. Only the latter result corresponds to the traditional neoclassical Ward-Vanek labour managed firm literature (though not necessarily with its comparative statics implications). A series of modelling extensions are discussed. Implications for existing and potential co-op leagues in developing countries are appraised, and implications for policy examined.en
dc.language.isoengen
dc.publisher|aThe United Nations University World Institute for Development Economics Research (UNU-WIDER) |cHelsinkien
dc.relation.ispartofseries|aWIDER Discussion Paper |x2002/87en
dc.subject.jelC72en
dc.subject.jelO12en
dc.subject.jelP13en
dc.subject.ddc330en
dc.subject.keywordco-operativesen
dc.subject.keywordnetworksen
dc.subject.keywordgame theoryen
dc.subject.keywordMondragónen
dc.subject.keywordLa Legaen
dc.subject.keywordLegacoopen
dc.subject.keywordlabour managed firmen
dc.subject.stwInteressengruppentheorieen
dc.subject.stwSpieltheorieen
dc.subject.stwArbeiterselbstverwaltungen
dc.subject.stwMondragónen
dc.subject.stwItalien (Nord)en
dc.titleAn endogenous group formation theory of co-operative networks: The economics of La Lega and Mondragón-
dc.typeWorking Paperen
dc.identifier.ppn355588005en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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