Kazuhiko Mikami

Asymmetric Information and the Form of Enterprise: Capitalist Firms and Consumer 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 firms 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.

Sunk Costs of Capital and the Form of Enterprise: Investor-Owned Firms and Worker-Owned Firms

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. Copyright

Cooperatives, Transferable Shares, and a Unified Business Law

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.

On the Emergence of Non‐Profit Firms as Alternatives to the Government

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.

Raising capital by issuing transferable membership in a consumer cooperative

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.

Not-for-Profit Hospitals and the Quality of Medical Care

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.

Sunk costs of physical capital and the form of enterprise: investor-owned firms, consumer cooperatives and public enterprises

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.