Control without Ownership: Public Insurance, Firm Boundaries, and Buyer Authority in Fixed-Factor Supply Chains

Gerrit Meyerheim

No 12963, CESifo Working Paper Series from CESifo

Abstract: Public support can change not only who receives income but also who controls productive assets. I study a fixed-factor supply chain in which private state-contingent finance is costly or capacity constrained and owners choose among autonomy, contractual control, and integration. A general theorem for finite-state convex transfer technologies decomposes the policy effect on contractual-control value into state-solvency relief and the participation value of the gap between contractual and autonomous marginal support. A common-primitives two-state specialization gives closed-form sufficient conditions for ownership-control divergence and verifies them on an open parameter region. Under single crossing, support can reduce legal integration while increasing downstream protocol authority. A second-price buyer-menu mechanism separates buyer-form allocation from post-selection surplus division. Organizational change alters the recipient base and optimal support under a grant-like policy. A separate emergency-loan application illustrates repayable public liquidity. Private claim completion can eliminate the organizational effect.

Keywords: public insurance; authority; vertical integration; buyer authority (search for similar items in EconPapers)
JEL-codes: D23 D86 H25 L22 (search for similar items in EconPapers)
Date: 2026
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