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Market socialism and the managerial labor market

Author

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  • Khalid Sekkat
  • Gérard Roland

Abstract

This paper presents a simple ratchet model. The ratchet effect, and the inability of the government to precommit credibly to given incentive schemes, are related to the fact that the government has monopsony power over managers, as is the case under market socialism where means of production are state-owned. But the introduction of a private sector of significant size gives an outside option to managers. Creating competition with the private sector is then a way to create credible commitment to public sector incentive schemes. Efficiency can be enhanced because of managers' interests in building a reputation on the managerial labour market, giving them the possibility of this outside option.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Khalid Sekkat & Gérard Roland, 1993. "Market socialism and the managerial labor market," ULB Institutional Repository 2013/7374, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/7374
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    Cited by:

    1. Roland, Gerard & Sekkat, Khalid, 2000. "Managerial career concerns, privatization and restructuring in transition economies," European Economic Review, Elsevier, vol. 44(10), pages 1857-1872, December.

    More about this item

    JEL classification:

    • D29 - Microeconomics - - Production and Organizations - - - Other
    • H39 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Other
    • P29 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Other

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