ECON 426W Midterm: 426 past exams
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The mondragon cooperatives have existed for about 50 years and have been studied intensively by economists and others for about 25 years. Nevertheless, there are few examples of similar cooperative systems. The proposal in chapter 12 to encourage employee buyouts borrowed ideas from the plywood coops, esops, codetermination, mondragon, and the lega. Two concepts that arose repeatedly during the course are moral hazard and adverse selection. Carefully define each concept and say how they differ. Do you think these ideas are major factors or minor factors in accounting for the rarity of. Author a claims that lmfs are rare because they provide poor work incentives compared to kmfs. Author b claims that this position is not supported by the empirical evidence, and anyway it violates the replication principle. Describe the arguments for each point of view and evaluate them. One observation about lmfs is that they are seldom found in capital-intensive industries.