Abstract: | Weitzman is correct in his claim that, in long-run equilibrium, the capital stock will be identical in wage and share systems. But a corollary of Weitzman's excess demand for labor in the short run is that the firm is holding too much capital at any given moment. The reduction in demand for capital goods following a shock might create a new channel for the accelerator. A share system also exposes workers to increased capital risk. |