Kazuhiko Mikami

This paper explores the implications of transferable shares in a cooperative firm as compared with shares in a capitalist firm. We argue that a cooperative firm issuing transferable shares is isomorphic to a capitalist firm as a business organization, while maintaining its essential characteristic of being owned not by capitalists but by members as input providers or output receivers. Based on this observation, we explore the possibility of developing a unified business law that regulates both capitalist and cooperative firms within a single legal framework.

It is well known that many non-profit firms coexist with government firms in industries that provide collectively consumed goods and services, such as education, healthcare, social services, and art and culture. This paper explores the specific circumstances under which non-profit firms can emerge as alternatives to the government. We show that a non-profit firm emerges only when the residents' median preference for a collective good is significantly low. This finding implies that, somewhat paradoxically, a non-profit firm emerges to replace the government and provide a collective good only when the majority of residents consider the good non-essential.

Purpose: It is generally recognized that consumer cooperatives are at a disadvantage when raising capital as compared to conventional capitalist firms. The purpose of this paper is to explore a method for consumer cooperatives to issue transferable membership shares as financial securities and raise non-redeemable equity. The author examines if such a method can strengthen the financial viability of consumer cooperatives in the market economy. Design/methodology/approach: The author first explain the mechanism by using diagrams of the circular flow of factors of production and the product. The author then developed a simple formal model and compare the amount of equity capital raised by a capitalist firm and a consumer cooperative. Findings: The author found that the amount of equity that a consumer cooperative can raise by issuing shares of membership is greater than the amount of equity that a capitalist firm can raise by issuing shares of stock. Research limitations/implications: More research effort is required to apply the theory discussed in this paper for practical use. Social implications: Consumer cooperatives have many good features that conventional capitalist firms do not have. However, the scale and scope of consumer cooperatives have been quite limited partly because of the problem of finance. The method presented in this paper is expected to improve the financial viability of consumer cooperatives and promotes their activities in the market economy. Originality/value: This paper regards the membership of a consumer cooperative as a kind of financial security and as a tool for procuring capital for investment. As far as the author knows, the present paper is the first one that presents such a concept.

Enterprises are usually classified according to two criteria: ownership (public or private) and objectives (for-profit or not-for-profit). Social enterprises, such as nonprofit organizations, cooperatives, and mutual societies, are categorized under the private, not-for-profit sector (the third sector), in contrast with the public sector (the first sector) and the private, for-profit sector (the second sector). In this study, we reconsider this traditional trichotomy and modify it to develop an alternative characterization of social enterprises, along with for-profit and public enterprises, on the basis of a single criterion, i.e., ownership of enterprise. As a tentative conclusion, we argue that the characteristics of social enterprises are not uniform, and that the differences of social enterprises from for-profit and public enterprises are not necessarily qualitative but more often a matter of degree.

It has been argued in the literature that limiting the profits of hospitals can be an effective method of maintaining the quality of medical care. The present paper examines this hypothesis using a simple formal model of the health-care market under asymmetric information. It is shown that, in some situations, the quality of medical care can be secured by imposing a limited-distribution constraint on hospitals.

It is generally recognized that worker cooperatives have a disadvantage in raising capital compared with conventional capitalist firms. In this paper, we explore a method for a worker cooperative to raise non-redeemable equity by issuing transferable membership shares as financial securities. © 2013 The Author.

This article considers how the efficiency of organizational forms of enterprise can depend on the level of sunk costs of physical capital in relation to market size, informational asymmetry and the heterogeneity of firm owners.

Cooperative firms are commonly thought to be financially weak and unable to flourish in the market economy. This paper addresses the idea that a consumer cooperative issues a membership, which represents an ownership share in the cooperative, as a method of procuring equity capital. It then shows that, in theory, consumer cooperatives are not necessarily financially weaker than investor-owned firms in the presence of a membership market. This implies that the consumer cooperative is potentially a promising alternative to the investor-owned firm when the latter type of firm induces serious market failure in the product market. © 2009 Elsevier B.V. All rights reserved.

This paper examines implications of sunk costs of capital for efficient forms of enterprise. It is assumed that firm owners and outside traders are asymmetrically informed of venture risks, and that there are sunk costs associated with investment in physical and human capital. We then make an efficiency comparison between investor-owned and worker-owned firms. We find that the firm is efficient when it is owned by the input supplier (the investor or worker) who incurs large sunk costs. This is because such an input supplier can credibly signal to the other input supplier that he in fact has a safe project. An empirical study based on the Japanese manufacturing industry seems to support the theoretical result. Journal compilation. © CIRIEC 2010.

Food processing businesses run by agriculture cooperatives (in this paper referred to as food processing cooperatives) are basically firms that are owned by the suppliers of raw materials. Typically, in this type of firm, corporate decision-making is the responsibility of member farmers through the one member one-vote rule, and the surplus of the business is divided among them according to the amount of raw agricultural products they have supplied to the firm. This is in contrast to a conventional capitalistic firm, in which corporate decision-making is ultimately made by the stockholders through the one share-one vote rule, and the profit is divided among them according to the amount of financial capital they have supplied to the firm. Based upon statistical data and case studies, the present paper considers some economic factors that might influence the establishment of food processing cooperatives.

This paper examines the implication of different enterprise forms - capitalist firm and consumer cooperative - for the level of accident risks, assuming informational asymmetry between the firm and the outside trader. Our conclusion is that, in order to reduce accident risks, we should choose an enterprise form that gives the firm's management rights to those who would incur the most substantial loss in case of an accident. This result depends upon how effectively the mechanism of signaling works under the firms, given a certain distribution of expected losses over individuals.

In his seminal work on fiscal federalism, Oates [Oates, W., 1972. Fiscal Federalism. Harcourt Brace Jovanovich, New York, NY] addressed the so-called Decentralization Theorem, which states that, if such factors as scale economies and spillovers are left out of consideration, a decentralized system is always more efficient than a centralized system for supplying local public goods. Based on his analytical framework, we show that a decentralized system may at times be inferior in efficiency to a centralized system under a democratic decision rule (Proposition 2). An intuition for this result is that, under majority rule, a majority may choose an extreme policy in a local district that best matches its own preference but ignores the interests of minorities. In some cases, such disregard of minority taste may result in a considerable loss of efficiency. If instead some moderate policies are chosen through voting in an integrated constituency, then the interests of minorities could be better served to some extent. As a result, centralization would improve social welfare. © 2006.

This paper examines the effect of market power on forms of enterprise. An efficiency comparison is made among three types of firms capitalist firms, worker-owned firms, and consumer cooperatives where each type of firm has monopoly and monopsony power in the market. Our result, that form depends on which variable is least sensitive to external change, can be understood by the standard theory of monopoly and monopsony and by some insight into implications of firm ownership on the structure of transactions among individuals. (C) 2003 Elsevier B.V. All rights reserved.

This paper addresses a joint production model in which individuals may become better off by giving up some profit. The key to this phenomenon is the existence of multiple inefficient equilibria, in which one individual makes an excessive effort and the other individual free-rides on it. In order to avoid all such simultaneous inefficient equilibria, it may be necessary to reduce all individuals' profit shares simultaneously so that none of them have incentives to make an excessive effort, which in turn would prevent free-riding behavior. This results in a total profit share that is less than 100%.

A proxy contest is a fight between two management teams to gain proxies from shareholders. The management team which accumulates a majority of votes wins the competition for corporate control. This paper attempts to construct a formal model of proxy contests and analyze their implications for the shareholders' benefit and power of control over the firm. (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: D23; L23; P12.

This paper seeks to find out the circumstances in which an increment in public good supply improves the welfare of the consumer, where only distortionary taxes are available to collect tax proceeds. Two factors are shown to affect the marginal financing cost of public good, which the marginal benefit of public good should be equated to. That is, the marginal financing cost is influenced by the ways of changing commodity fax rates, and by the substitute-complement relation between public and private goods. The assumption of weak separability of the utility function is suggestive to think of the latter aspects.

This paper considers welfare-improving commodity tax reform in an economy where tax proceeds are spent on public good and its supply level is variable according to the tax reform. Two sorts of tax reform are examined; reducing (raising) the highest (lowest) tax rate, and changing all tax rates towards a certain target level. These tax reforms are shown to improve the welfare of the economy provided that a substitutability condition for the demand for commodities is satisfied and the initial tax rates are properly located in relation with the target of tax reform.

This paper considers a trade-off between efficiency and equity which results from a commodity tax reform. First we derive a theoretical proposition which characterizes the efficiency effect and the equity effect brought about by a tax reform. Then, we apply the theoretical result to Japanese liquor tax structure and calculate the welfare variation caused by a tax reform.