The name is absent

It is easy to see that the first best solution of the social planners program is

*⅛ = ɪ (ʌɪ + ʌ²) + T (ɪ - ⅜) A^m - I-

Partnership

In this case, we suppose that only one of the employees is the owner (partner) of the
firm. When a good employee is the owner, then the value of the firm is V^s. 5 = 1,2.
Since in the economy there is an over supply of ordinary employees, a bad employee does
not produce value and the bargaining solution is given by:

Agent: partner E⁹ employee E^m employee E^b customer C_x
share:    V — u^rn υ^m — υ^b          0            v^b

where, g = 1,2: m == 3.4: and b = 5,6.

If the owner is a middle employee, when ∕' > 1, then bargaining solution is the follow-
ing:¹⁰

Agent: employee E¹

share:    V¹ — V²

in the case that the firm hires E¹ :

Agent: employee E²
share:        υ²

in the case that the firm hires E².

If the owner is a bad employee, then bargaining solution is the following.

Agent: employee F¹ employee E^m partner E^b
share:    V¹ -V² υ^rn — υ^b V² — υ^m

in the case that the firm hires E^x : or

Agent: employee E² employee E^m partner E^b

partner E^m

V²-υ^b

or

partner E^m

V*²-υ²-υ^b

employee E^b
0

employee E^b
0

customer C_t

υ^b

customer C,
v^b

customer Ci
υ^b

customer С_г

share:     v² — v^b υ^τn — υ^b V² + v^b — υ² — υ^m υ^b

in the case that the firm hires E².

Hence, the partner and non-partner employees E^p and Eⁿ choose their human capital
investments, k_p and k_n. to solve respectively:

≡∙×{⅞∑K^λ' ^lo≡(¹ - M ÷ ⅛² Σ K^{yn 1}°8(¹ ÷ ^fcp)) - M (15)
0=l                        m=J

¹⁰VVe suppose that V^d - V’² > vɪ.

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