Abstract
The property-rights structure of the “Basque” firm, directly derived from Mondragon industrial cooperatives, is discussed in this paper which focuses on two prominent characteristics: the “capital accounts” and the collective reserve fund. It is shown that the Basque firm, although it does not allow membership rights to be traded, is in a better position than the Illyrian firm to cope with problems of weak property rights, in particular the lack of personal commitment and incorrect incentives for both the admission of new members and investment.
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