Abstract
We generalize a standard general equilibrium framework extended for moral hazard to allow for a dispersed initial ownership distribution of firms. We show that the market allocation is constrained-efficient only when in each firm the entrepreneur who generates payoffs through nobservable effort has full initial ownership in his firm. © 2005 Elsevier B.V. All rights reserved.
Original language | English |
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Pages (from-to) | 36-45 |
Journal | Journal of Mathematical Economics |
Volume | 42 |
DOIs | |
Publication status | Published - 2006 |