John Pencavel is a highly respected labor economist who in this work has written a small gem of new institutional analysis. This book deserves a readership among economic historians because it is a model of how institutional differences can be analyzed empirically. In this work Pencavel undertakes a theoretical and empirical analysis of cooperatives in the lumber industry in the Pacific Northwest.

Pencavel begins his work by pointing out that the bargain between employers and workers tends to favor the employer. That is, that labor markets at their most fundamental level are not as efficient as, say, the market for tomatoes. Participants, especially employees, face relatively large search and information costs, which, along with the public-goods aspect of work, means entry and exit does not necessarily lead to optimal outcomes.