Abstract
Labour-managed firms (LMFs) are enterprises over which suppliers of labour hold full control rights. Theoretical analysis suggests that such firms will behave in a distinctive and sometimes ‘perverse’ manner in response to short-run changes, but richer models can reverse the more problematic results, and the simple model indicates that LMFs behave no differently from capitalist firms in long-run competitive equilibrium. Empirical studies indicate that LMFs, while uncommon in most market economies, can achieve high productive efficiency. The search for an understanding of why LMFs are relatively rare has contributed to both positive and normative economic analysis.
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