Corporate self-regulation of imperfect competition

Herve Cres and Mich Tvede
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Herve Cres: New York University in Abu Dhabi
Mich Tvede: University of East Anglia

No 2020-01, University of East Anglia School of Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

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. 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 performance of various governances 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: 2020-01-02
New Economics Papers: this item is included in nep-com and nep-mic
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