Replicating Walrasian equilibria using markets for membership in labor-managed firms

In standard models of the labor-managed firm, labor is misallocated in the short run. This problem can be eliminated by introducing a market for membership in each firm. These markets substitute for the capitalist labor market and support equilibria isomorphic to Walrasian equilibria. Such LMFs resemble familiar Ward-Domar-Vanek LMFs by ensuring that firm sizes are optimal for ex post members, but they also have the property that firm sizes are optimal for workers endowed with ex ante membership rights.