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

摘要

This article provides a study of corporate control in a general equilibrium frameworkfor production economies. When markets are incomplete, trading assets does not allowagents to fully resolve their conflict of interest: at the market equilibrium, shareholdersdisagree on the way to evaluate production plans which ly outside the market span, andthe objective function of the firm is not well defined. Two ways of resolving these conflictsare 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 stableproduction plan is one which cannot be overruled by a majority of shareholders. Sincevoting occurs in a multi-dimensional setup, super majority rules are needed to ensureexistence of such ‘political’ equilibria. The most interesting equilibria are those whichare stable with respect to the super majority rule with smallest rate. The present paperprovides a framework where these two approaches yield the same equilibria.