An economy with two dates is considered, one state at the first date and a finite number of states at the last date. Shareholders determine production plans by voting — one share, one vote — and at ?-majority stable stock market equilibria, alternative production plans are supported by at most ? × 100 percent of the shareholders. It is shown that a ?-majority stable stock market equilibrium exists if ? = S - J S - J + 1 , where S is the number of states at the last date and J is the number of firms. Moreover, an example shows that ?-majority stable stock market equilibrianeed not exist for smaller ?’s.
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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number
04-09.
Length: 28 pages Date of creation: May 2004 Date of revision: Handle: RePEc:kud:kuiedp:0409
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