Dispersed initial ownership and the efficiency of the stock market under moral hazard

Riccardo Calcagno and Wolf Wagner
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Riccardo Calcagno: Tilburg University [Tilburg] - Netspar
Wolf Wagner: Tilburg University [Tilburg] - Netspar, CAM - University of Cambridge [UK]

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Abstract: We generalize a standard general equilibrium framework extended for moral hazard to allowfor a dispersed initial ownership distribution of firms.We show that the market allocation is constrained-efficient only when in each firm the entrepreneur who generates payoffs through unobservable effort has full initial ownership in his firm.

Keywords: Stock market equilibrium; Moral hazard; General equilibrium; Constrained optimality (search for similar items in EconPapers)
Date: 2006-02-01
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Published in Journal of Mathematical Economics, 2006, 42 (1), 36-45 p. ⟨10.1016/j.jmateco.2004.11.003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02313018

DOI: 10.1016/j.jmateco.2004.11.003

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