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Ownership structure and control in incomplete market economies with transferable utility

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Abstract

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 C measured in units of good 0. We analyze how the size and the composition of C influences 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 Dréze and of a Grossman-Hart equilibrium that occur in spite of the close similarity of the formulas which define them.

Suggested Citation

  • Egbert Dierker & Hildegard Dierker, 2011. "Ownership structure and control in incomplete market economies with transferable utility," Vienna Economics Papers vie1106, University of Vienna, Department of Economics.
    • Handle: RePEc:vie:viennp:vie1106
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    Cited by:

    1. Marc Oliver Bettzüge & Thorsten Hens & Michael Zierhut, 2022. "Financial intermediation and the welfare theorems in incomplete markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(2), pages 457-486, April.
    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. Egbert Dierker, 2015. "A multiperiod Drèze rule," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 129-151, October.
    4. Michael Zierhut, 2017. "Constrained efficiency versus unanimity in incomplete markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(1), pages 23-45, June.
    5. Michael Zierhut & Chiaki Hara, 2025. "Shareholder Unanimity: A Survey from the Viewpoint of Incomplete Markets," KIER Working Papers 1112, Kyoto University, Institute of Economic Research.

    More about this item

    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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