Corporate self-regulation of imperfect competition

Hervé Crès () and Mich Tvede ()
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Hervé Crès: New York University in Abu Dhabi
Mich Tvede: University of East Anglia, Norwich Research Park

Economic Theory, 2023, vol. 75, issue 4, No 8, 1205 pages

Abstract: 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.

Keywords: Cournot–Walras equilibrium; Majority voting; Pareto optimality; Shareholder governance; Stakeholder democracy; Walrasian equilibria (search for similar items in EconPapers)
JEL-codes: D41 D43 D51 D61 D71 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00199-022-01443-3

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