Private Benefits of Control and the Core

Lee Kyounghun () and Oh Frederick Dongchuhl ()
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Lee Kyounghun: KAIST College of Business, Korea Advanced Institute of Science and Technology, 85 Hoegi-Ro, Dongdaemoon-Gu, Seoul 02455, Korea
Oh Frederick Dongchuhl: KAIST College of Business, Korea Advanced Institute of Science and Technology, 85 Hoegi-Ro, Dongdaemoon-Gu, Seoul 02455, Korea

The B.E. Journal of Economic Analysis & Policy, 2023, vol. 23, issue 1, 253-260

Abstract: This study aims to analyze the core in production economies with private benefits of control. We consider two types of shareholders in a firm: small shareholders and the controlling shareholder. Unlike small shareholders, the controlling shareholder’s utility increases not only with the consumption of goods but also with private benefits related to the production level of the firm and his controlling power. We observe that the private benefits of control are allowed in the core only when the transferred utility from the controlling shareholder to small shareholders is higher than the small shareholders’ utility loss from private benefits.

Keywords: production; private benefits of control; core (search for similar items in EconPapers)
JEL-codes: C71 D58 G34 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/bejeap-2022-0249

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