SFB 303 Discussion Paper No. A - 263

Author: Bös, Dieter, and Lorenz Nett
Title: Employee Share Ownership and Privatisation: A Comment by Dieter Bös and Lorenz Nett
Abstract: The comment refers to a paper by Grout published in the ECONOMIC JOURNAL (1988). Grout's paper is concerned with the impact of employee shares on the net income of the employees. Analysing a specific game he concludes that "workers in aggregate do not gain from share ownership". This conclusion is not always true. Grout does not correctly apply the perfect equilibrium concept although he claims to do so. Choosing a particular specification within his model and determining the equilibrium of his game, we give an example where employees increase their net income by buying employee shares even in the worst possible case of a share price equal to the market value of the shares.
JEL-Classification-Number: 611
Creation-Date: November 1989
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