Articles

Voting in Assemblies of shareholders and Incomplete Markets

M. Tvede, H. CRES

Economic Theory

November 2005, vol. 6, n°4, pp.887-907

Departments: Finance

Keywords: General equilibrium, Incomplete markets, Production, Shareholders’ voting, Super majority


An 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 mostpercent of the shareholders. It is shown that a-majority stable stock market equilibrium exists ifwhereSis the number of states at the last date andJis the number of firms. Moreover, an example shows that-majority stable stock market equilibria need not exist for smaller's.


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