Chapter

Risk and Welfare, II: Consolidation and Public Ownership

G. B. Richardson

in Information and Investment

Second edition

Published in print July 1997 | ISBN: 9780198292432
Published online November 2003 | e-ISBN: 9780191596810 | DOI: http://dx.doi.org/10.1093/0198292430.003.0011
 Risk and Welfare, II: Consolidation and Public Ownership

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Firms grouping investments can obtain an aggregate return that is less uncertain than its component yields, but only if the size and certainty of the latter is not reduced in the process. Given this condition, it might seem that the consolidation of investments throughout the economy could, by reducing the discrimination against the uncertainty of individual outcomes, afford an increase in total income that could then be distributed according to any chosen principles of equity. But the condition could not be met, as the arrangement, by eliminating individual liability, and setting aside competitive discipline and selection, would impair the quality of decision‐taking. Economic progress depends on preserving a sufficient diversity of approach.

Keywords: consolidation; incentives; individual responsibility; selection and diversity; the quality of decision‐taking

Chapter.  6792 words. 

Subjects: Microeconomics

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