1,739 research outputs found
Fluctuations in Overlapping Generations Economies
No full textIn the present paper stationary pure-exchange overlapping generations economies with l goods per date and m consumers per generation are considered. It is shown that for an open and dense set of utility functions there exist endowment vectors such that n-cycles exist for n ≤ l +1 and l ≤ m. The approach to existence of endogenous fluctuations is basic in the sense that the prime ingredients are the implicit function theorem and linear algebra. Moreover the approach is applied to show that for an open and dense set of utility functions there exist endowment vectors such that sunspot equilibria, where prices at every date only depends on the state at that date, exist.cycles; overlapping generations economies; sunspot equilibria
Voting in Assemblies of Shareholders and Incomplete Markets
No full textAn economy with two dates is considered, one state at the first date and a finite number of states at the last date. Shareholders determine production plans by voting — one share, one vote — and at ?-majority stable stock market equilibria, alternative production plans are supported by at most ? × 100 percent of the shareholders. It is shown that a ?-majority stable stock market equilibrium exists if ? = S - J S - J + 1 , where S is the number of states at the last date and J is the number of firms. Moreover, an example shows that ?-majority stable stock market equilibrianeed not exist for smaller ?’s.general equilibrium; incomplete markets; firms, voting
Production in incomplete markets: Expectations matter for political stability.
No full textIn the present paper we study voting-based corporate control in a general equilibrium model with incomplete financial markets. Since voting takes place in a multi-dimensional setting, super-majority rules are needed to ensure existence of equilibrium. In a linear–quadratic setup we show that the endogenization of voting weights (given by portfolio holdings) can give rise to – through self-fulfilling expectations – dramatical political instability, i.e. Condorcet cycles of length two even for very high majority rules.
Democracy, the Market, and the Firm:How the Interplay between Trading and Voting Fosters Political Stability and Economic Efficiency
No full textWhy are collective choices so stable and easy to make in practice, when in theory it should be totally otherwise? This question has puzzled social scientists since Condorcet in the eighteenth century. A striking illustration of this puzzle is the almost unanimous support of shareholders in publicly traded companies to the motions tabled by directors. Democracy, the Market, and the Firm investigates the behavioural assumptions leading to an alignment of shareholders, even in a context of severe market failures, and provides an analysis of the philosophical and axiomatic underpinnings of these assumptions. In sum, and figuratively, Crès and Tvede argue that the invisible hand of the market and the active hand of democracy can work hand in hand to give rise to a better world. The first part of the book explores the interplay between the voting and trading mechanisms. Two main arguments are proposed: on the one hand, the better the market works, the easier it is for majority voting to achieve political stability; on the other hand, among all market equilibria, those that are politically stable are more likely to be economically efficient. The second part of the book explores the feedback from collective choices to individual preferences
n-Person Nonconvex Bargaining: Efficient Proportional Solution
No full textFor n-person bargaining problems the family of proportional solutions (introduced and characterized by Kalai) is generalized to bargaining problems with non-convex payoff sets. The so-called "efficient proportional solutions" are characterized axiomatically using natural extensions of the original axioms provided by Kalai.n-person non-convex bargaining; proportional solutions; egalitarian solution
Production in Incomplete Markets: Expectations Matter for Political Stability
No full textIn the present paper we study voting-based corporate control in a general equilibrium model with incomplete financial markets. Since voting takes place in a multi-dimensional setting, super-majority rules are needed to ensure existence of equilibrium. In a linear-quadratic setup we show that the endogenization of voting weights (given by portfolio holdings) can give rise to - through self-fulfilling expectations - dramatical political instability, i.e. Condorcet cycles of length two even for very high majority rules.incomplete markets; super majority voting; political (in)stability; selfulfilling expectations
Portfolio diversification and internalization of production externalities through majority voting
No full textIn absence of markets for externalities, the authors look for governances and conditions under which majority voting among shareholders is likely to give rise to efficient internalization. The central and natural role played by a governance of stakeholders is underlined and benchmarked.Production externalities; majority voting; portfolio diversification; general equilibrium; stakeholder governance; mean voter
- …
