Although general equilibriumin in labor-managed economies can sustain the same Pareto-efficient allocations as in profit maximizing economies, the LM economy's behavior outside equilibrium is fundamentally different. In particular, the general equilibrium in a LM economy is unstable. This is shown in a model embodying price adjustment based on quantity rationing.
Weinrich, G., Instability of General Equilibrium in a Labor-Managed Economy, <<JOURNAL OF COMPARATIVE ECONOMICS>>, 1993; (17): 43-69 [http://hdl.handle.net/10807/38001]
Instability of General Equilibrium in a Labor-Managed Economy
Weinrich, Gerd
1993
Abstract
Although general equilibriumin in labor-managed economies can sustain the same Pareto-efficient allocations as in profit maximizing economies, the LM economy's behavior outside equilibrium is fundamentally different. In particular, the general equilibrium in a LM economy is unstable. This is shown in a model embodying price adjustment based on quantity rationing.
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