Voting in assemblies of shareholders and incomplete markets

Author Info

Listed author(s):
• Mich Tvede

()

• Hervé Crés

()

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Abstract

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 $\rho$ -majority stable stock market equilibria, alternative production plans are supported by at most $\rho \times 100$ percent of the shareholders. It is shown that a $\rho$ -majority stable stock market equilibrium exists if $$\rho\ \geq\ \dfrac{S-J}{S-J + 1},$$ where S is the number of states at the last date and J is the number of firms. Moreover, an example shows that $\rho$ -majority stable stock market equilibria need not exist for smaller $\rho$ ’s. Copyright Springer-Verlag Berlin/Heidelberg 2005

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Bibliographic Info

Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 26 (2005)
Issue (Month): 4 (November)
Pages: 887-906

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 Handle: RePEc:spr:joecth:v:26:y:2005:i:4:p:887-906 DOI: 10.1007/s00199-004-0537-x Contact details of provider: Web page: http://www.springer.com Order Information: Web: http://www.springer.com/economics/economic+theory/journal/199/PS2

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1. Grossman, Sanford J & Hart, Oliver D, 1979. "A Theory of Competitive Equilibrium in Stock Market Economies," Econometrica, Econometric Society, vol. 47(2), pages 293-329, March.
2. Caplin, Andrew & Nalebuff, Barry, 1991. "Aggregation and Social Choice: A Mean Voter Theorem," Econometrica, Econometric Society, vol. 59(1), pages 1-23, January.
3. CRES, Herve & TVEDE, Mich, 2001. "Proxy fights in incomplete markets: when majority voting and sidepayments are equivalent," Les Cahiers de Recherche 726, HEC Paris.
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5. CRES, Herve, 2000. "Majority stable production equilibria : a multivariate mean shareholders theorem," Les Cahiers de Recherche 706, HEC Paris.
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7. Shafer, Wayne & Sonnenschein, Hugo, 1975. "Equilibrium in abstract economies without ordered preferences," Journal of Mathematical Economics, Elsevier, vol. 2(3), pages 345-348, December.
8. Greenberg, Joseph, 1979. "Consistent Majority Rules over Compact Sets of Alternatives," Econometrica, Econometric Society, vol. 47(3), pages 627-636, May.
9. Radner, Roy, 1972. "Existence of Equilibrium of Plans, Prices, and Price Expectations in a Sequence of Markets," Econometrica, Econometric Society, vol. 40(2), pages 289-303, March.
10. Caplin, Andrew S & Nalebuff, Barry J, 1988. "On 64%-Majority Rule," Econometrica, Econometric Society, vol. 56(4), pages 787-814, July.
11. Ferejohn, John A. & Grether, David M., 1974. "On a class of rational social decision procedures," Journal of Economic Theory, Elsevier, vol. 8(4), pages 471-482, August.
12. Balasko, Yves & Cres, Herve, 1997. "The Probability of Condorcet Cycles and Super Majority Rules," Journal of Economic Theory, Elsevier, vol. 75(2), pages 237-270, August.
13. Peter M. DeMarzo, 1993. "Majority Voting and Corporate Control: The Rule of the Dominant Shareholder," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 713-734.
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