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Capital Accumulation, Welfare, and the Emergence of Pension-Fund Activism

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  • Pascal Belan
  • Philippe Michel
  • Bertrand Wigniolle

Abstract

This paper presents an overlapping-generations model with altruistic consumers, in which pension funds, by holding a significant share of capital assets, produce noncompetitive behavior. We study the consequences of such behavior for capital accumulation and welfare in the long run when subsidies are associated with contributions to pension funds. If bequests are operative and the subsidy rate is not too high, the capital stock increases with the introduction of pension funds, and this increases long-run utility. If bequests are not operative without pension funds, the rise in long-run welfare is no longer guaranteed, even if the subsidy rate is low.

Suggested Citation

  • Pascal Belan & Philippe Michel & Bertrand Wigniolle, 2007. "Capital Accumulation, Welfare, and the Emergence of Pension-Fund Activism," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(1), pages 54-82, March.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200703)63:1_54:cawate_2.0.tx_2-v
    DOI: 10.1628/001522107X186728
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    Cited by:

    1. Belan, Pascal & Michel, Philippe & Wigniolle, Bertrand, 2005. "Does imperfect competition foster capital accumulation in a developing economy?," Research in Economics, Elsevier, vol. 59(2), pages 189-208, June.
    2. Ronald Ravinesh Kumar & Peter J. Stauvermann, 2021. "Revisited: Monopoly and Long-Run Capital Accumulation in Two-Sector Overlapping Generation Model," JRFM, MDPI, vol. 14(7), pages 1-19, July.

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    More about this item

    Keywords

    imperfect competition; capital accumulation; pension funds; altruism;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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