A note on multiplicative uncertainty and shareholders' unanimity

摘要

In economies with production under uncertainty in which firms invest capital (possibly many types) ex-ante and employ labor (possibly many types) ex-post, we provide an extension of the multiplicative technological uncertainty model of Diamond (1967) that allows for both technological and price uncertainty. This multiplicative uncertainty property is shown to hold if and only if the production functions display Constant Return to Scale with respect to some capital aggregator and the labor inputs. The result extends the rationale for shareholders' unanimity and for the objective of (net) value maximization to a large class of incomplete market economies. (C) 2018 Elsevier B.V. All rights reserved.