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Lookup NU author(s): Professor Mich Tvede
We study internalization of production externalities in perfectly competitive markets where production plans are decided by majority voting. Since shareholders want firms to maximize dividends of portfolios rather than profits, they are interested in some internalization. Two governances, namely the shareholder governance (one share, one vote) and the stakeholder democracy (one stakeholder, one vote), are compared. We argue that perfect internalization is more likely to be the outcome of the stakeholder democracy than the shareholder governance.
Author(s): Cres H, Tvede M
Publication type: Article
Publication status: Published
Journal: Economic Theory
Year: 2013
Volume: 53
Issue: 2
Pages: 403-424
Print publication date: 01/03/2012
Date deposited: 13/01/2012
ISSN (print): 0938-2259
ISSN (electronic): 1432-0479
Publisher: Springer
URL: http://dx.doi.org/10.1007/s00199-012-0697-z
DOI: 10.1007/s00199-012-0697-z
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