Economic growth in a cooperative economy

Brzustowski, Thomas and Caselli, Francesco (2024) Economic growth in a cooperative economy. Journal of the European Economic Association. ISSN 1542-4766 (In Press)

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Abstract

We develop and formalize an equilibrium concept for a dynamic economy in which pro- duction takes place in worker cooperatives. The concept rules out allocations of workers to cooperatives in which a worker in one cooperative could move to a different cooperative and make both herself and the existing workers in the receiving cooperative better off. It also rules out allocations in which workers in a cooperative would be made better off by some of the other workers leaving. We also provide a minimum-information equilibrium- selection criterion which renes our equilibrium concept. We illustrate the application of our concept and renement in the context of an overlapping-generation economy with specic preferences and technology. The cooperative economy follows a dynamic path qualitatively similar to the path followed by a capitalist economy, featuring gradual convergence to a steady state with constant output. However the cooperative economy features a static inef- ciency, in that, for a given aggregate capital stock, rm size is smaller than what a social planner would choose. On the other hand, the cooperative economy cannot be dynamically inefficient, and could accumulate capital at a rate that is higher or lower than the capitalist economy. As a result, steady-state income per worker could be higher or lower in the coop- erative economy. We also present an illustrative calibration which quantitatively compares steady-state incomes and welfare in a cooperative and in a capitalist economy.

Item Type:	Article
Additional Information:	© 2024 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HB Economic Theory
Date Deposited:	26 Sep 2024 10:45
Last Modified:	26 Sep 2024 13:24
URI:	http://eprints.lse.ac.uk/id/eprint/125535

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