COMPARATIVE ECONOMIC-PERFORMANCE OF CONVENTIONAL AND PROFIT-SHARING FIRMS

This paper compares the various economic properties of conventional firms and profit-sharing firms. The properties contrasted include wage level, employment, output price, total economic rents and industry efficiency. The firms operate in an oligopolistic industry with a labor union. In general, profit-sharing firms outperform non-sharing firms. However, there exist counterexamples in which non-sharing firms can outperform sharing firms. To test the robustness of the results, the analysis is conducted for a variety of oligopolistic industries: quantity-setting, price-setting and joint collusion.