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Ownership structure and control in incomplete market economies with transferable utility

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Abstract

We consider an economy with incomplete markets and a single firm and assume that utility can be freely transferred in the form of the initially available good 0 (quasilinearity). In this particularly simple and transparent framework, the objective of a firm can be defined as the maximization of the total utility of its control group C measured in units of good 0. We analyze how the size and the composition of C influences the firm's market behavior and state conditions under which the firm sells its output at prices which are at, above, or below marginal costs, respectively. We discuss the assumption of competitive price perceptions and point out important differences between the concepts of a Dréze and of a Grossman-Hart equilibrium that occur in spite of the close similarity of the formulas which define them.

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  • Egbert Dierker & Hildegard Dierker, 2011. "Ownership structure and control in incomplete market economies with transferable utility," Vienna Economics Papers vie1106, University of Vienna, Department of Economics.
    • Handle: RePEc:vie:viennp:vie1106
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    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • G1 - Financial Economics - - General Financial Markets

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