2 FORMS OF WORKERS ENTERPRISES FACING IMPERFECT LABOR-MARKETS

We analyse workers' enterprises (WEs) facing an imperfect labor market with two different internal property rights structures. One type, the discriminatory WE (DWE), admits new members sequentially, charging each the maximum he is willing to pay as entrance fee. The non-discriminatory WE (NDWE), on the other hand, admits new members in a single block, charging them all the same entrance fee. All except the marginal member in the DWE earn strictly more than their opportunity wages. The behavior of both types of WE is derived from the interests of individual members. Under perfect competition the two types coincide in their employment behavior, behaving efficiently. Under imperfect competition, while the DWE remains fully efficient, the NDWE becomes inefficient, although less so than its profit-maximizing twin acting as a non-discriminatory monopsony.