Abstract
An economy with two dates is considered, one state at the first date and a finite number of states at the last date. Shareholders determine production plans by voting - one share, one vote - and at ρ-majority stable stock market equilibria, alternative production plans are supported by at most ρ x 100 percent of the shareholders. It is shown that a ρ-majority stable stock market equilibrium exists if ρ ≥ S - J/S - J + 1, where S is the number of states at the last date and J is the number of firms. Moreover, an example shows that ρ-majority stable stock market equilibria need not exist for smaller ρ's.
Original language | English (US) |
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Pages (from-to) | 887-906 |
Number of pages | 20 |
Journal | Economic Theory |
Volume | 26 |
Issue number | 4 |
DOIs | |
State | Published - Nov 2005 |
Keywords
- General equilibrium
- Incomplete markets
- Production
- Shareholders' voting
- Super majority
ASJC Scopus subject areas
- Economics and Econometrics