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Majority Choice and the Objective Function of the Firm under Uncertainty

Author

Listed:
  • Simon Benninga
  • Eitan Muller

Abstract

A set of production vectors is said to fulfill the "current spanning" condition if any firm's current production vector is spanned by the rest of the market. Our major theorem shows that, given current spanning, a production plan may be found which will always win the approval of a majority of the firm's initial shareholders. Furthermore, these shareholders are shown to be the only ones concerned with the firm's production plans. Finally, we show that an equilibrium exists in which all firms choose plans approved by a majority of their shareholders.

Suggested Citation

  • Simon Benninga & Eitan Muller, 1979. "Majority Choice and the Objective Function of the Firm under Uncertainty," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 670-682, Autumn.
    • Handle: RePEc:rje:bellje:v:10:y:1979:i:autumn:p:670-682
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    Citations

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    Cited by:

    1. Azar, José, 2017. "Portfolio Diversification, Market Power, and the Theory of the Firm," IESE Research Papers D/1170, IESE Business School.
    2. Hervé Crès & Mich Tvede, 2005. "Portfolio Diversification and Internalization of Production Externalities through Majority Voting," SciencePo Working papers hal-01065579, HAL.
    3. repec:spo:wpecon:info:hdl:2441/10281 is not listed on IDEAS
    4. Hervé Crès & Mich Tvede, 2005. "Portfolio Diversification and Internalization of Production Externalities through Majority Voting," SciencePo Working papers Main hal-01065579, HAL.
    5. Hervé Crès, 2006. "A Geometric Study of Shareholders’ Voting in Incomplete Markets: Multivariate Median and Mean Shareholder Theorems," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 27(2), pages 377-406, October.
    6. repec:hal:spmain:info:hdl:2441/10281 is not listed on IDEAS
    7. Hervé Crès & Mich Tvede, 2004. "The Drèze and Grossman-Hart criteria for production in incomplete markets: Voting foundations and compared political stability," Working Papers hal-00591676, HAL.
    8. Hervé Crès & Mich Tvede, 2009. "Production in incomplete markets: Expectations matter for political stability," SciencePo Working papers Main hal-01022731, HAL.
    9. Crès, Hervé & Tvede, Mich, 2009. "Production in incomplete markets: Expectations matter for political stability," Journal of Mathematical Economics, Elsevier, vol. 45(3-4), pages 212-222, March.
    10. Hervé Crès & Mich Tvede, 2005. "Portfolio Diversification and Internalization of Production Externalities through Majority Voting," Working Papers hal-01065579, HAL.
    11. Stefano Demichelis & Klaus Ritzberger, 2011. "A general equilibrium analysis of corporate control and the stock market," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(2), pages 221-254, February.
    12. Hervé Crès & Mich Tvede, 2009. "Production in incomplete markets: Expectations matter for political stability," SciencePo Working papers hal-01022731, HAL.
    13. L. Marsiliani & X. Liu & Л. Марсилиани & К. Лю, 2017. "Структура Акционерного Капитала И Степень Эксплуатации Нефтяных Месторождений // Share-Ownership Distribution And Extraction Rate Of Petroleum In Oil Fields," Review of Business and Economics Studies // Review of Business and Economics Studies, Финансовый Университет // Financial University, vol. 5(1), pages 42-53.
    14. repec:hal:wpspec:info:hdl:2441/10267 is not listed on IDEAS
    15. repec:hal:wpspec:info:hdl:2441/10281 is not listed on IDEAS
    16. Azar, José & Schmalz, Martin & Tecu, Isabel, 2017. "Anti-Competitive Effects of Common Ownership," IESE Research Papers D/1169, IESE Business School.
    17. repec:hal:spmain:info:hdl:2441/10267 is not listed on IDEAS
    18. Ritzberger, Klaus, 2005. "Shareholder voting," Economics Letters, Elsevier, vol. 86(1), pages 69-72, January.
    19. repec:spo:wpecon:info:hdl:2441/10267 is not listed on IDEAS

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