| Author: | Drago, R. Turnbull, G. |
| Title: | On the incidence of profit sharing |
| Journal: | Journal of Economic Behavior and Organization
1996 : OCT, VOL. 31:1, p. 129-138 |
| Index terms: | ECONOMIC BEHAVIOUR ORGANIZATION PROFIT SHARING |
| Language: | eng |
| Abstract: | The authors examine the impact of industry demand on workers' propensity to free ride under profit sharing. Allowing the firm to respond to worker behaviour and the market to adjust to worker and firm behaviour, the authors find that workers tend to restrict output by shirking where industry demand is inelastic, in which case the firm will avoid profit sharing. Only where demand is elastic will workers have the incentive to avoid free riding and the firm the incentive to employ a sharing scheme. The analysis is generally consistent with empirical research and provides several novel predictions. |
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