This thesis explores the behaviour and performance of labour- managed firms in a capitalist economy through comparisons between labour-managed and capitalist enterprises and by examining interactions, market and non-market, between the two organisational forms. These investigations are pursued in the context of monopsonistic or oligopsonistic labour markets and product market duopoly. The scarcity of managerial skills may mean that day to day control is delegated to a specialist. We demonstrate that the existence of managerial discretion can have important consequences for the short-run behaviour of labour-managed firms. Finally we consider the factors which determine whether labour-management will emerge under capitalism. This involves an assessment of the theoretical and empirical literature on the relative efficiency of the two modes of production, and then an analysis of whether the outcome depends purely on relative efficiency, or whether distributional considerations are also important.