IDEAS home Printed from
   My bibliography  Save this paper

On the Determination of the Return to Capital when there is no Exogenous Ownership in Firms


  • CRETTEZ, Bertrand
  • MICHEL, Philippe


This paper addresses the issue of the determination of return to capital when there is no exogenous ownership in firms. Hahn and Solow have proposed a notion of equilibrium for this setting and we consider this notion from a partial equilibrium point of view (i.e. under the assumption that the rate of return to capital is given). We present a study of the notion of compatible and perfectly compatible capital stocks with a given rate of return. A capital stock is compatible with a given rate of return if it yields a gross operating surplus per unit of capital equal to this rate of return. Perfectly compatible capital stocks are capitals which are compatible and which maximize “pure profit”, i.e. the difference between profit and the product of the rate of return times the capital stocks. Our assumptions encompass but are not reduced to the standard case where production sets exhibit constant returns to scales. Several examples of independent interest are presented. The results of this paper could be useful in the study of small open economies, or in a general equilibrium setting (with the usual assumption that firms are symmetric).

Suggested Citation

  • CRETTEZ, Bertrand & MICHEL, Philippe, 2004. "On the Determination of the Return to Capital when there is no Exogenous Ownership in Firms," Cahiers de recherche 07-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  • Handle: RePEc:mtl:montec:07-2004

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Hahn and Solow equilibrium; compatible capital stock;

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mtl:montec:07-2004. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sharon BREWER). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.