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Private Benefits of Control and the Core

Author

Listed:
  • Lee Kyounghun

    (KAIST College of Business, Korea Advanced Institute of Science and Technology, 85 Hoegi-Ro, Dongdaemoon-Gu, Seoul 02455, Korea)

  • Oh Frederick Dongchuhl

    (KAIST College of Business, Korea Advanced Institute of Science and Technology, 85 Hoegi-Ro, Dongdaemoon-Gu, Seoul 02455, Korea)

Abstract
This study aims to analyze the core in production economies with private benefits of control. We consider two types of shareholders in a firm: small shareholders and the controlling shareholder. Unlike small shareholders, the controlling shareholder’s utility increases not only with the consumption of goods but also with private benefits related to the production level of the firm and his controlling power. We observe that the private benefits of control are allowed in the core only when the transferred utility from the controlling shareholder to small shareholders is higher than the small shareholders’ utility loss from private benefits.

Suggested Citation

  • Lee Kyounghun & Oh Frederick Dongchuhl, 2023. "Private Benefits of Control and the Core," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 23(1), pages 253-260, January.
    • Handle: RePEc:bpj:bejeap:v:23:y:2023:i:1:p:253-260:n:8
    DOI: 10.1515/bejeap-2022-0249
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    More about this item

    Keywords

    production; private benefits of control; core;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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