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Ownership structure and efficiency in large economies

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  • Camelia Bejan

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  • Florin Bidian

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Abstract

We analyze the limit behavior of sequences of oligopolistic equilibria in which firms follow objectives consistent with their shareholders’ interests. We show that convergence to a competitive outcome may fail for some distributions of firms’ shares across consumers and provide a characterization of the class of ownership structures that lead to Walrasian equilibrium allocations in the limit. Copyright Springer-Verlag 2012

Suggested Citation

  • Camelia Bejan & Florin Bidian, 2012. "Ownership structure and efficiency in large economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 571-602, August.
  • Handle: RePEc:spr:joecth:v:50:y:2012:i:3:p:571-602
    DOI: 10.1007/s00199-010-0585-3
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    References listed on IDEAS

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    1. Jaskold Gabszewicz, Jean & Vial, Jean-Philippe, 1972. "Oligopoly "A la cournot" in a general equilibrium analysis," Journal of Economic Theory, Elsevier, vol. 4(3), pages 381-400, June.
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    3. Camelia Bejan, 2008. "The objective of a privately owned firm under imperfect competition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(1), pages 99-118, October.
    4. Birgit Grodal & Egbert Dierker, 1999. "The price normalization problem in imperfect competition and the objective of the firm," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(2), pages 257-284.
    5. MONIQUE FLORENZANO & ELENA L. del MERCATO, 2006. "Edgeworth and Lindahl-Foley equilibria of a General Equilibrium Model with Private Provision of Pure Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(5), pages 713-740, December.
    6. David Kelsey & Frank Milne, 2006. "Externalities, monopoly and the objective function of the firm," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(3), pages 565-589, November.
    7. Hart, Oliver D, 1979. "On Shareholder Unanimity in Large Stock Market Economies," Econometrica, Econometric Society, vol. 47(5), pages 1057-1083, September.
    8. Mas-Colell, Andreu & Nachbar, John H., 1991. "On the finiteness of the number of critical equilibria, with an application to random selections," Journal of Mathematical Economics, Elsevier, vol. 20(4), pages 397-409.
    9. Monique Florenzano, 2007. "General equilibrium," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00250167, HAL.
    10. Hildenbrand, W & Mertens, J F, 1972. "Upper Hemi-Continuity of the Equilibrium-Set Correspondence for Pure Exchange Economies," Econometrica, Econometric Society, vol. 40(1), pages 99-108, January.
    11. McKenzie, Lionel W, 1981. "The Classical Theorem on Existence of Competitive Equilibrium," Econometrica, Econometric Society, vol. 49(4), pages 819-841, June.
    12. Mas-Colell, Andreu, 1980. "Noncooperative approaches to the theory of perfect competition: Presentation," Journal of Economic Theory, Elsevier, vol. 22(2), pages 121-135, April.
    13. Aliprantis, Charalambos D. & Brown, Donald J. & Burkinshaw, Owen, 1987. "Edgeworth equilibria in production economies," Journal of Economic Theory, Elsevier, vol. 43(2), pages 252-291, December.
    14. Camelia Bejan & Florin Bidian, 2012. "Ownership structure and efficiency in large economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 571-602, August.
    15. Hildenbrand, Werner, 1970. "On economies with many agents," Journal of Economic Theory, Elsevier, vol. 2(2), pages 161-188, June.
    16. Roberts, Kevin, 1980. "The limit points of monopolistic competition," Journal of Economic Theory, Elsevier, vol. 22(2), pages 256-278, April.
    17. Allen, Beth, 1994. "Randomization and the limit points of monopolistic competition," Journal of Mathematical Economics, Elsevier, vol. 23(3), pages 205-218, May.
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    Cited by:

    1. Camelia Bejan & Florin Bidian, 2012. "Ownership structure and efficiency in large economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 571-602, August.
    2. Hervé Crès & Mich Tvede, 2013. "Production externalities: internalization by voting," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(2), pages 403-424, June.
    3. Hervé Crès & Mich Tvede, 2011. "Production externalities: internalization by voting," Working Papers hal-00972983, HAL.
    4. Egbert Dierker & Hildegard Dierker, 2012. "Ownership structure and control in incomplete market economies with transferable utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(3), pages 713-728, November.

    More about this item

    Keywords

    Firm’s objective; Strategic foundations of competitive equilibrium; Ownership structure; D21; D43; D51;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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