Crès, H. orcid.org/0000-0003-0333-5343 and Tvede, M. (2023) Corporate self-regulation of imperfect competition. Economic Theory, 75. pp. 1181-1205. ISSN 0938-2259
Abstract
We consider Cournot competition in general equilibrium. Decisions in firms are taken by majority voting. Naturally, interests of voters—shareholders or stakeholders—depend on their endowments and portfolios. Indeed, voters in every firm are concerned about the return on their portfolios rather than their shares in the firm. We introduce two notions of local Cournot–Walras equilibria to overcome difficulties arising from non-concavity of profit functions and multiplicity of equilibrium prices. We show existence of local Cournot–Walras equilibria, and characterize distributions of voting weights for which equilibrium allocations are Pareto optimal. We discuss the efficiency of various governance modes and highlight the importance of financial markets in regulating large firms.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2022. This is an author-produced version of a paper subsequently published in Economic Theory. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Cournot–Walras equilibrium; Majority voting; Pareto optimality; Shareholder governance; Stakeholder democracy; Walrasian equilibria |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 16 Jan 2023 16:21 |
Last Modified: | 12 Jul 2024 16:00 |
Status: | Published |
Publisher: | Springer |
Refereed: | Yes |
Identification Number: | 10.1007/s00199-022-01443-3 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:194798 |