HAL will be down for maintenance from Friday, June 10 at 4pm through Monday, June 13 at 9am. More information
Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

Proxy fights in incomplete markets: when majority voting and sidepayments are equivalent

Abstract : This article provides a study of corporate control in a general equilibrium framework for production economies. When markets are incomplete, trading assets does not allow agents to fully resolve their conflict of interest: at the market equilibrium, shareholders disagree on the way to evaluate production plans which ly outside the market span, and the objective function of the firm is not well defined. Two ways of resolving these conflicts are compared here. The first one (see, e.g., Dr'eze (1974) and Grossman & Hart (1979)) relies on sidepayments between shareholders. The second one (see, e.g., Dr'eze (1985) and DeMarzo (1993)) relies on majority voting in the assembly of shareholders: a stable production plan is one which cannot be overruled by a majority of shareholders. Since voting occurs in a multi-dimensional setup, super majority rules are needed to ensure existence of such 'political' equilibria. The most interesting equilibria are those which are stable with respect to the super majority rule with smallest rate. The present paper provides a framework where these two approaches yield the same equilibria.
Document type :
Preprints, Working Papers, ...
Complete list of metadata

Cited literature [28 references]  Display  Hide  Download

Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Wednesday, September 17, 2014 - 4:09:29 PM
Last modification on : Tuesday, March 22, 2022 - 3:34:48 AM
Long-term archiving on: : Thursday, December 18, 2014 - 11:36:38 AM


Files produced by the author(s)


  • HAL Id : hal-01065004, version 1
  • SCIENCESPO : 2441/10282



Hervé Crès, Mich Tvede. Proxy fights in incomplete markets: when majority voting and sidepayments are equivalent. 2001. ⟨hal-01065004⟩



Record views


Files downloads