Competition and Approximation
Volume: Volume 9, No. 1
Issue: Spring 1978
Pages: pp. 280-286
Authors: Mark Rubinstein
Title: Competition and Approximation
Abstract: The proposition stated in the following quotation is shown to depend on a very restrictive application of the assumption of competitive markets:
Where there exist organized capital markets in which shares can be freely bought and sold and where these markets are perfect...it is possible to develop an objective, operational decision criterion for management that (1) does not involve stockholder utility functions directly but (2) leads to precisely the same investment and operating decisions that each stockholder would make if he were running the firm himself.
Eugene Fama and Merton Miller, The Theory of Finance, p. 69
JEL Classification
Microeconomic Theory General (0220)
Capital Markets: Theory, Including Portfolio Selection, and Empirical Studies Illustrating Theory (3131)