This paper offers an economic model of the operation of a multi-level marketing (MLM) firm in competitive and non-competitive markets. The model takes a recursive approach to analyse decision making at the distributor level. This model is used to understand basic issues in the MLM market and...

A major theoretical objection against employee ownership is that workers become inadequately diversified and exposed to excessive financial risk. Recent theory concludes that 10-15% of a worker's wealth portfolio can be prudently invested in employer stock provided the rest of the portfolio is...

Skilled workers often have strong bargaining positions in compensation negotiations. This paper studies the implications for firm financing, workers' compensation structure, and turnover. There are three main insights. First, workers in strong bargaining positions demand equity-based...

By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non-shirkers, we show that the...

When it is hard to assess product quality, firms will sub-optimally hire low ability workers. We show that organizing as a profit-sharing partnership can alleviate these problems. Our theory explains the historical prevalence of profit sharing in professional service industries such as law,...

How employee share ownership plans (ESOPs) affect employee compensation and shareholder value depends on the size. Small ESOPs, defined as those controlling less than 5% of outstanding shares, benefit both workers and shareholders, implying positive productivity gains. However, the effects of...

A small literature has shown that individual wellbeing varies with the price of company stock, but it is unclear whether this is due to wealth effects among those holding stock, or more general effects on sentiment, with individuals taking rising stock prices as an indicator of improvements in...

When it is hard to assess product quality, firms will sub-optimally hire low ability workers. We show that organizing as a profit-sharing partnership can alleviate these problems. Our theory explains the historical prevalence of profit sharing in professional service industries such as law,...

In this paper, we examine major trends and potential for cooperatives in the context of four prominent socio-economic issues: the lack of jobs, economic and social inequality, educational mobility, and the priority need for innovations. We present recent data on the amount and types of job...

While intuition suggests that empowering workers to have some say in the control of the firm is likely to have beneficial incentive effects, empirical evidence of such an effect is hard to come by because of numerous confounding factors in the naturally occurring data. We report evidence from a...