Corporate Equilibrium Properties of a Centralized Objective Function GEI Model
AbstractWe introduce an incomplete markets general equilibrium model with idiosyncratic risk, where production is financed via stock market, and where the ownership structure endogenized. This model is a variation of Drèze (1974), Grossman and Hart (1979), and Magill and Quinzii (2002). The paper discusses two main corporate equilibrium properties. It shows that (i) the class of centralized objective functions introduces a further source of inefficiency into the organization of production, and (ii) the indeterminacy of corporate equilibria. (iii) It further shows the separation of the economic decisions of the agents.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 10/18.
Date of creation: Jul 2010
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