The paper analyzes wage incentives in labor-managed (LMF) and profit maximizing (PMF) firms, considering competitive, individualized, and collective incentives. Partially collective incentives are optimal for LMFs unless workers strike binding effort-matching agreements, which imply the...

The authors analyze the effects of demand elasticities on production where competitive firms confront common productivity variations. Firms with single worker-owners respond optimally to demand and productivity conditions. For principal-agent firms, Simon's employment relation is optimal, while...