The optimum size of the labor-managed firm

Yochanan Shachmurove, Uriel Spiegel

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


Ward's [1958] main result is that an increase in the output price of the labor-managed firm (LMF) decreases its output and members. However, Ward and his followers have not addressed two important elements: the benefit of sharing a public good among LMF members and the increased coordination costs among these members. This paper incorporates these elements to derive the LMF's optimal size and suggests conditions which may alter Ward's perverse result. The example of the Israeli Kibbutzim concerning both incorporating the public goods as well as coordination costs serves as a motivation to the model developed in this paper.

Original languageEnglish
Pages (from-to)110-117
Number of pages8
JournalAtlantic Economic Journal
Issue number2
StatePublished - 1996


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