A general equilibrium analysis of corporate control and the stock market

Demichelis, Stefano and Ritzberger, Klaus (2011) A general equilibrium analysis of corporate control and the stock market. Economic Theory, 46 (2). pp. 221-254.

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This paper studies a general equilibrium model with an investor-controlled firm. Shareholders can vote on the firm’s production plan in an assembly if they dislike management’s decision. Prior to that they may trade shares on the stock market. Since stock market trades determine the distribution of votes, trading is strategic. There is always an equilibrium, where share trading leads to an ownership structure that supports competitive behavior. But there may also be equilibria, where monopolistic behavior prevails. (authors' abstract)

Item Type: Article in Academic Journal
Status: Published
Date Deposited: 26 Jan 2015 11:57
Last Modified: 01 Apr 2016 14:16
URI: http://irihs.ihs.ac.at/id/eprint/2638

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