We study political distortions that emerge in situations where agents' political power is disproportionate with respect to their economic power. We use the Shapley value to evaluate both the economic and the political power. We show that usual weighted majority voting cannot prevent political distortions from emerging in a huge mass of situations. Distortions are less severe if partners can leave the union at low cost. We propose an alternative voting method based on random assignments of voting rights. Agents are given chances to vote instead of weights. If chances are computed according to a specific formula, no political distortion occurs.As an application, we analyze the rotation voting system recently adopted by the European Central Bank. We find that this system yields an enormous amount of political distortion. Then we compute the voting chances that should be assigned to Eurozone countries in order to eliminate it.
Firms sign an integration contract with the purpose of increasing their expected pro…ts from trade and competition with third parties. Gains depend on how the contract improves the partners' production function (e.g. better synergies, organization, etc.), and how it increases their power in the marketplace.We investigate three bilateral integration contracts under di¤erent ownership allocations over resources: M&A, Minority Stake purchase and Joint Venture. We study them theoretically with a cooperative game approach. We derive some pro…tability conditions that we test empirically on a sample of about 9000 US …rms. In order to estimate the link between ownership, asset complementarity and pro…ts over time, we propose a novel multiproduct and time-varying complementarity index. Empirical results fully support our theoretical predictions.
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