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Ownership structure and control in incomplete market economies with transferable utility


  • Egbert Dierker


  • Hildegard Dierker



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 $${\fancyscript C}$$ measured in units of good 0. We analyze how the size and the composition of $${\fancyscript C}$$ influence 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 Drèze and of a Grossman-Hart equilibrium that occur in spite of the close similarity of the formulas which define them. Copyright Springer-Verlag 2012

Suggested Citation

  • 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.
  • Handle: RePEc:spr:joecth:v:51:y:2012:i:3:p:713-728 DOI: 10.1007/s00199-011-0621-y

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    References listed on IDEAS

    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. Dierker, Egbert & Dierker, Hildegard, 2010. "Welfare and efficiency in incomplete market economies with a single firm," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 652-665, September.
    3. Egbert Dierker & Hildegard Dierker, 2010. "Drèze equilibria and welfare maxima," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 45(1), pages 55-63, October.
    4. 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.
    5. 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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    Cited by:

    1. Volker Britz & P. Herings & Arkadi Predtetchinski, 2013. "A bargaining theory of the firm," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(1), pages 45-75, September.
    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. repec:spr:etbull:v:3:y:2015:i:2:d:10.1007_s40505-015-0073-9 is not listed on IDEAS
    4. Hervé Crès & Mich Tvede, 2011. "Production externalities: internalization by voting," Working Papers hal-00972983, HAL.
    5. repec:spr:joecth:v:64:y:2017:i:1:d:10.1007_s00199-016-0968-1 is not listed on IDEAS

    More about this item


    Firm objectives; Market structure and pricing; Incomplete markets with production; Drèze equilibria; Constrained efficiency; Minimal efficiency; D2; D4; D21; D52; D61;

    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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