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Licensed Unlicensed Requires Authentication Published by De Gruyter November 21, 2022

Private Benefits of Control and the Core

  • Kyounghun Lee and Frederick Dongchuhl Oh ORCID logo EMAIL logo


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.

JEL Classification: C71; D58; G34

Corresponding author: Frederick Dongchuhl Oh, KAIST College of Business, Korea Advanced Institute of Science and Technology, 85 Hoegi-Ro, Dongdaemoon-Gu, Seoul 02455, Korea, E-mail:

We wish to thank the editor (Till Requate) and a reviewer for their guidance and constructive comments. Any remaining errors are ours.


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Received: 2022-07-12
Accepted: 2022-11-09
Published Online: 2022-11-21

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