This paper shows that increasing product market competition can have a direct impact on the employment relationship and … on wage inequality. I develop a simple model in which an increase in product market competition increases returns to …

case of perfect competition, an outside owner achieves the first-best; a cooperative typically does not, because the rent … from any cost advantage relative to the market is used to shield members from competitive pressure, and the median voter …'s preferences may not reflect average preferences. Second, in the case where the members of a cooperative have common preference …

and others in specialization. Our theory throws light on the nature of hierarchy, the optimal degree of decentralization …