a search theoretic model of the retail market for illicit drugs a search theoretic model of the retail market for illegal drugs is developed trade occurs in bilateral potentially long lived matches between sellers and buyers buyers incur search costs when experimenting with a new seller moral hazard is present because buyers learn purity only after a trade is made this model is consistent with some new stylized facts about the drugs market and it is informative for policy design the effectiveness of different enforcement strategies is evaluated including some novel ones that leverage the moral hazard present in the market copyright oxford university press

payment card rewards programs and consumer payment choice abstract by using a unique data set that contains detailed information about consumer payment choice and consumers attitudes toward each payment method we estimate the effects of payment card rewards on consumer choice of payment methods our approach allows us to control for consumer heterogeneity we find the effects of rewards to be statistically significant across five retail types our policy experiments suggest that for the sub population who hold both credit and debit cards removing rewards would increase their share of paper based payment methods i e cash and checks measured in terms of in store transactions by no more than 4 percentage points

decriminalization and marijuana smoking prevalence evidence from australia this article uses the 2001 national drug strategy household survey to assess the impact of marijuana decriminalization policy on marijuana smoking prevalence in australia both parametric and nonparametric methods are used the parametric approach includes endogenous probit switching two part sample selection and standard dummy variable models while the nonparametric approach uses propensity score stratification matching specification analyses are also conducted a nonparametric kernel based test is constructed to select between parametric and nonparametric models and the likelihood ratio test is used to choose among parametric models our analyses favor the endogenous switching model where decriminalization increases the probability of smoking by 16 2

pricing risk adjusted deposit insurance an option based model this paper presents a methodology for arriving at empirical estimates of deposit insurance premiums from market data by using isomorphic relationships betweeen equity and a call option and insurance and a put option the data utilizes the market value of equity to solve for the asset value and its volatility market perceptions of fdic bailout policies are explicitly modeled so as to eliminate the bias in inverted values of assets and their volatility sensitivity analyses are performed to show that rank orderings based on premiums are robust to changes in specification thus facilitating allocation of aggregate premium across banks while economists have long argued in favor of risk adjusted deposit insurance as both more equitable and more efficient than the current system of flatrate premiums various recent developments have further contributed to an increasing dissatisfaction with the current system first both the banking industry and the government seem to be tending to the view that deregulation of the banking industry would be necessary in order to meet more sophisticated future demands on the industry as well as desirable as a policy means of stimulating greater competition among banks moreover a sudden rise in the incidence of bank failures 1 and the vulnerability of the u s banks to the socalled international debt crisis have served to bring to the fore concern about the health of the banking industry in the absence of deposit insurance riskier banks will be able to attract deposits only at higher rates and these higher costs of funding serve as built in market regulated incentives to limit excessive risk taking by banks as introduction of deposit insurance makes deposits equally risk free across banks these incentives disappear and regulation and close supervision of the banking industry must necessarily replace them as deterrents to excessive risk taking thus when insurance is offered at a flat premium regulation is designed to ensure that the risk posed to the insurer both asset and financial risk is appropriately uniform

mutual holding companies evidence of conflicts of interest through disparate dividends abstract the mutual holding company mhc structure establishes a dual class stock that creates a unique opportunity to transfer wealth from thrift depositor owners to new minority shareholders through the disparate payment of dividends we show that mhcs are priced higher than comparable non mhcs and dividend policy is a significant component of this valuation we also show that mhc thrifts pay significantly higher dividends than non mhc thrifts and that an office of thrift supervision ots ruling reducing the potential for disparate dividends between the two classes of shareholders resulted in lower dividends these results have policy implications of special significance given that the ots reversed its position in 2000 and because of the current controversy over the use of the mhc structure in the financial service industry

corruption federalism and policy formation in the oecd the case of energy policy we investigate whether the effect of government corruption is conditional on a country s institutional structure federal systems have an additional layer of government making lobbying relatively more costly we investigate whether the effect of government corruption on environmental policy in the form of restrictions on energy use is conditional on a federal system being in place using 1982 96 data from 11 industry sectors in 12 oecd economies we find that while greater government corruption reduces the stringency of environmental policy the effect declines in federal systems

drugs policy what should we do about cannabis public policy has failed to prevent large scale consumption of cannabis in most developed countries so what if anything should we do to change the policy environment cannabis consumption is unambiguously harmful in several ways but this does not automatically justify the prohibitionist policy dictated by the international drugs conventions this paper sets out the arguments for policy intervention in the cannabis market and reviews the directions of policy change that have been called for we argue that existing theoretical insights and empirical evidence give little compelling reason to prefer prohibition to the alternative of legalization of cannabis with harms controlled by regulation and taxation given this conclusion and the much wider prevalence of cannabis than of harder drugs a reasonable way forward is to remove cannabis production and consumption but not trade from the current prohibitionist un drug control treaties to allow countries to adopt their own policies thus generating new evidence on the potential impacts of a wider range of policy stephen pudney

pricing and packaging the case of marijuana in many markets unit prices decline as the quantity purchased rises a phenomenon that can be considered part of the economics of packaging this article reviews the economic foundations of quantity discounts and proposes new ways of measuring and analyzing them these ideas are implemented with the prices of marijuana a product that is shown to be priced in a manner not too different from that used for groceries as well as some other illicit drugs in broad terms the results support the following pricing rule the unit price falls by 2 5 when the package size increases by 10

marijuana on main street estimating demand in markets with limited access abstract marijuana is the most common illicit drug with vocal advocates for legalization among other things legalization would increase access and remove the stigma of illegality our model disentangles the role of access from preferences and shows that selection into access is not random we find that traditional demand estimates are biased resulting in incorrect policy conclusions if marijuana were legalized those under 30 would see modest increases in use of 28 percent while on average use would increase by 48 percent to 19 4 percent tax policies are effective at curbing use where australia could raise au 1 billion and the united states us 12 billion jel d12 h25 k14 k42

disproportional control rights and the governance role of debt we examine the governance role of debt in the context of u s based dual class ownership structures we hypothesize that the use of debt alleviates the conflict between shareholder classes by balancing the power of controlling insiders we document that dual class firms have higher leverage and a greater propensity to issue private debt they also more frequently use cash sweeps and performance based covenants dual class firms with greater agency conflicts and a greater need to access the capital market appear to rely more extensively on debt these findings are consistent with controlling insiders bonding against the agency costs associated with dual class ownership the governance role of debt is further corroborated by the valuation effect of debt for dual class companies private debt issuances trigger greater positive market reactions to the inferior dual class stock in relation to both the superior dual class stock and a matched sample of single class firms further leverage attenuates the previou

upstream innovation and product variety in the u s home pc market this article investigates the welfare implications of the rapid innovation in central processing units cpus and asks whether it results in inefficient elimination of basic personal computer pc products i analyse a game in which firms make multiple discrete product choices and tackle challenges such as partial identification and sample selection estimation results demonstrate that the demand for pcs is highly segmented and that fixed costs consume a substantial portion of the per unit producer profit the estimated model implies that intel s introduction of its pentium m chip contributed significantly to the growth of the mobile pc segment and to consumer welfare the lion s share of the benefits to consumers was enjoyed by the 20 least price sensitive consumers i also find that the pentium m crowded out the pentium iii and pentium 4 technologies and that the benefits to consumers from keeping those older products on the shelf would have been comparable to the added fixed costs while total welfare cannot be increased by keeping older technologies on the shelf such a policy would have allowed the benefits from innovation to trickle down to price sensitive households improving their access to mobile computing

the pot rush is legalized marijuana a positive local amenity this paper examines the amenity value of legalized marijuana by analyzing the impact of marijuana legalization on migration to colorado colorado is the pioneering state in this area having legalized medical marijuana in 2000 and recreational marijuana in 2012 we test whether potential migrants to colorado view legalized marijuana as a positive or negative local amenity we use the synthetic control methodology to examine in and out migration to from colorado versus migration to from counterfactual versions of colorado that have not legalized marijuana we find strong evidence that potential migrants view legalized marijuana as a positive amenity with in migration significantly higher in colorado compared with synthetic colorado after the writing of the ogden memo in 2009 that effectively allowed state laws already in place to be activated and additionally after marijuana was legalized in 2013 for recreational use when we employ permutation methods to assess the statistical likelihood of our results given our sample we find that colorado is a clear and significant outlier we find no evidence for changes in out migration from colorado suggesting that marijuana legalization did not change the equilibrium for individuals already living in the state jel i18 r23 k42 c22

the role of insider influence in mutual to stock conversions using a sample of 347 demutualizing thrifts from 1991 to 2004 we show that the level of inside participation is not a traditional signal of firm performance we conclude that unanticipated inside participation reflects the incentives of insiders to reduce the size of the offer to influence the level of expected initial public offer ipo returns we find unanticipated inside participation is related to lower offer size and higher initial returns but we do not find a relationship between inside participation and post ipo performance

limited information and advertising in the u s personal computer industry traditional discrete choice models assume buyers are aware of all products for sale in markets where products change rapidly the full information assumption is untenable i present a discrete choice model of limited consumer information where advertising influences the set of products from which consumers choose to purchase i apply the model to the u s personal computer market where top firms spend over 2 billion annually on advertising i find estimated markups of 19 over production costs where top firms advertise more than average and earn higher than average markups high markups are explained to a large extent by informational asymmetries across consumers where full information models predict markups of one fourth the magnitude i find that estimated product demand curves are biased toward being too elastic under traditional models i show how to use data on media exposure to improve estimated price elasticities in the absence of micro ad data

rent seeking noncompensated transfers and laws of succession my purpose in this paper is to analyze inefficiencies that may emerge from the noncompensated transfer of valued rights among persons this source of inefficiency has not to my knowledge been fully incorporated either in the economic theory of property rights or in orthodox tax analysis my discussion is based on the elementary fact that all noncompensated transfers are rents to the recipients implications for the emergence of rent seeking behavior follow straightforwardly the now familiar propositions to the effect that rent seeking may dissipate economic value can be applied to a variety of transfer settings only a few of which are explored in this paper 1 to the extent that the efficiency criterion is the relevant norm direct implications may be drawn for policy with respect to the laws or rules for succession

economic evaluation of voting power of common stock this paper presents an economic evaluation of common stock voting rights an index of relative voting rights inequality for different classes of stock of the same corporation is constructed and the empirical relationship between the market premium on a superiorvoting stock and the voting inequality index is examined in only three out of the 25 cases could investors have arbitraged between the two classes of stock although in one case the arbitrage opportunity persisted for several months ownership and control of large corporations are two separate functions each shareholder typically holds a relatively small number of shares and hence lacks significant voting power as a result shareholders interest in the management of the firm is typically limited and a majority of them do not participate in the corporation s general meetings 1 thus the investment and financial decisions of the firm are made by a small group the management which effectively controls the firm the possible conflict of interest between these two groups and other various aspects of the separation of control and ownership are the subject of several studies 2 grossman and hart 5 show that even if the directors of the firm do not act in the best interest of the shareholders 3 it may be impossible for them to be disciplined and replaced by a takeover bid this raises the issue of whether theright to control the firm s activities has any economic value to focus the issue suppose a firm issues two classes of stock one with voting rights and the other with no voting rights and assume further that the two classes are entitled to the same pecuniary payoff in every state of the world according to traditional financial theory that asserts that two assets promising the same payoff in every state of nature must sell for the same price the voting rights would be worthless and we should expect the same market price for the two classes of stock however

on corporate governance a study of proxy contests abstract this paper examines a sample of firms experiencing proxy contests for seats on their board of directors dissident shareholders usually fail to obtain a majority of board seats nevertheless they capture some seats via mechanisms such as cumulative voting in over half of the sample contests regardless of proxy contest outcome positive and statistically significant share price performance is associated with the contest that finding is predicted by the standard economic analysis of proxy contests in which the challenges benefit shareholders by improving corporate performance the finding runs counter to the claim of berle 1962 that the economists view of proxy contests is a wholly imaginary picture a portion of the positive share price changes taking place in the early stages of some proxy contests is not permanent however and as suggested by manne 1962 is at least partially attributable to temporary increases in the market value of the vote attached to corporate shares

the economic case against drug prohibition this paper discusses the costs and benefits of drug prohibition it offers a detailed outline of the economic consequences of drug prohibition and a systematic analysis of the relevant empirical evidence the bottom line is that a relatively free market in drugs is likely to be vastly superior to the current policy of prohibition

managerial ownership of voting rights abstract managers of firms with dual classes of common stock can choose different quantities of votes for a given cash flow interest by choosing different quantities of the two securities we study managerial stock holdings in 45 dual class firms and find that vote ownership per se is an important motivation for these holdings in that corporate officers and their families hold a median 56 9 of the votes and 24 0 of the common stock cash flows we also find significant family involvement in many sample firms and document four case studies in which explicit acquisition premiums were paid for superior voting shares

the managerial regulatory and financial determinants of bank merger premiums this paper analyzes the managerial regulatory and financial determinants of us bank merger premiums we use both individual acquirer and target bank characteristics we also examine state regulation of acquirer and target banks from a geographically dispersed population allowing us specifically to test the effect of a varied state regulatory menu the study finds merger premiums to be related to the characteristics of both acquirer and target banks and the regulatory environments in both acquirer and target bank states we also find evidence that the separation of ownership and control in acquirer and target banks has a significant effect on merger premiums in the last decade the pace of mergers in the us banking industry has been impressive this growth in the number of bank mergers has largely been due to the changing economic and regulatory environment with the reduction in the severity of enforcing strict antitrust guidelines by the reagan administration and more importantly the gradual removal of geographical restrictions by individual states on bank expansion the environment for bank mergers has never been so conducive since the regulatory restrictions are likely to be further relaxed with an increasing number of states permitting interstate banking in the early 1990s the number and dollar value of bank mergers is certain to accelerate accordingly it is important to improve our understanding of bank mergers this paper examines the financial regulatory and managerial determinants of bank merger premiums in examining the financial determinants of the merger premiums we include the financial characteristics of the target banks and the franchise value of its banking market because bank mergers are carefully regulated by state laws we also analyze the regulation in the banks states we examine the state regulation of acquirer and target banks

asset restructuring strategies in bank acquisitions does distance between dealing partners matter abstract one of the most lively debated effects of banking acquisitions is the change in lending and asset allocation of the target bank in favour of transaction based products at the expense of small and informationally opaque borrowers these changes may be the result of two distinct restructuring strategies pursued by the acquirer with respect to the asset portfolio of the acquired bank a cleaning strategy cs in which the acquirer makes a clean sweep of all the negative net present value activities in the portfolio of the acquired bank and a portfolio strategy ps in which the acquiring bank permanently changes the portfolio allocation of the acquired bank in this paper we focus on italian bank acquisitions and test which asset restructuring strategy was predominantly pursued over the period 1997 2003 moreover we distinguish acquisitions according to their geographic diversifying character and to the physical and cultural distances that separate acquiring from acquired banks when we look at the mean value we do not find clear evidence of a primacy either of css or pss when we separate in market from out of market bank acquisitions however results show that the css prevail only in the former type of deals while in the latter the portfolio of acquired banks is subject to pss finally we find that differences in asset restructuring strategies can be explained by differences in corporate culture and the workplace environment of the dealing partners

the valuation of fdic deposit insurance using option pricing estimates when congress set the premium rate for fdic deposit insurance in the banking act of 1935 which authorized a permanent federal insurance system neither experience nor theory could offer much guidance regarding an appropriate fee structure although rates have since been periodically revised the fdic has yet to attempt to set the insurance rate at a ifair level that is a level equal to administrative costs plus the ex ante value of the insurance such a premium is the rate that would be charged by competitive private insurers however7 the garn st germain act of 1982 directed the fdic to consider the feasibility of a risk based premium structure in response the fdic has suggested a trial system in which each insured bank will be placed in one of three risk classes based on credit and interest rate risk relative to capital and a premium rate will be assigned to each group those rates will be determined in part by the loss experience of the entire banking system fdic 1983 another approach to the determination of the appropriate insurance premium has been offered by merton 1977 who suggested using the analogous relationship between deposit guarantees and put options to value fdic insurance in this paper we follow merton s suggestion and calculate bank specific estimates of the proper premium for deposit insurance for the banks in our sample we find that fdic rates greatly exceed estimates of the fair value of the insurance derived from the blackscholes 1972 option pricing model

financial determinants of bank takeovers note in recent years more takeovers have occurred in banking than in any other industry mergers acquisitions 1987 this activity resulted partly from liberalized laws affecting branch and interstate banking and partly from the number of failed banks t as more states liberalize their laws regarding banking structure and regional pacts takeovers of bank and nonbank financial institutions are expected to increase 2 thus understanding the determinants of the prices paid in bank takeovers is important to the large portion of the banking industry that is either a potential target or potential bidder or both greater knowledge of the determinants of purchase prices can also help shed light on commercial bank operations 3 several recent studies examine the determinants of bank merger pricing these studies tend to focus on the characteristics of the target and to downplay the characteristics of the acquiror these studies also tend to use a single proxy for each theoretical effect for example one measure of the target s earnings the individual studies are reviewed below but in general they find a positive relationship between purchase price and some measure of the target s potential growth and a negative relationship between purchase price and some measure of the ratio of the target s total assets to the acquiror s total assets other variables including those for the target s profitability are sometimes but not always statistically significant one difference between this study and prior studies is that this study places greater emphasis on acquiror related characteristics acquirors tend to pay a premium for a controlling interest in banks this premium suggests that the firm

pressure politics and government spending in belgium in this article we tried to offer an explanation for the evolution in belgian government spending over the period 1961 1984 this explanation was based on a demand model featuring the median voter and a supplement with a political module in the traditional part of the model price income and population variables were used for the political module we called upon the pressure group theory of mueller and murrell 1983 while we also developed our own theory

consideration sets and competitive marketing we present a model of competitive marketing based on the notion that consumers are boundedly rational and that firms use marketing tactics in an attempt to influence consumers decision process the standard model of consumer behaviour assumes that the consumer applies well defined preferences to a perfectly perceived set of available alternatives we retain the assumption that consumers have stable preferences but relax the assumption that they have a perfect perception of what is relevant for their consumption problem thus allowing firms to manipulate that perception our aim is to explore the market implications of this departure from the standard model especially for the way firms deploy marketing strategies in competitive environments the cornerstone of our model is the observation that in the modern marketplace consumers face an overwhelmingly large variety of products and therefore often use screening criteria deliberate as well as unconscious in order to reduce the number of relevant alternatives as a result consumers apply their preferences not to the set of objectively feasible alternatives but to a potentially smaller set which they construct at an earlier stage of the decision process borrowing a term from the marketing literature we refer to this set as the consideration set the basic idea underlying this term is that consumers may be unaware of some of the feasible products and even when they become aware of a new product they still need to be persuaded to consider it as a potential substitute to their currently consumed product

light cannabis and organized crime evidence from unintended liberalization in italy abstract this paper explores the unintended liberalization of light cannabis that occurred in italy in december 2016 by means of a legislative gap in order to assess its effect on the illegal supply of marijuana although liberalization interested the entire italian territory in the short run the level of intensity varied according to the pre liberalization market configuration of grow shops i e retailers that sold industrial cannabis related products we exploit this variation using a differences in differences did design with a unique dataset on monthly confiscations of drugs at the province level during 2016 2018 which is matched with data on the geographical location of shops and socio demographic variables we find that the liberalization of light cannabis led to a reduction of up to 14 in marijuana confiscations per each pre existing grow shop and a significant decrease in both other cannabis derived drugs and in the number of people arrested for drug related offences back of the envelope calculations suggest that forgone revenue for criminal organizations amount to at least 90 170 million euros per year these results support the argument that the supply of illegal drugs is displaced by the entry of official and legal retailers

who uses illegal drugs gary becker and kevin murphy 1988 present a theoretical model of rational addiction that requires information on past present and future prices they do not study illegal drugs empirically in this and their related papers a major data source is the annual survey of high school seniors hss also known as monitoring the future this work is summarized in l johnston et al 1988 they find a growing use of drugs measured by monthly annual and lifetime prevalence over time and differences by region and sex cocaine use showed marked increases from 1976 though this levelled off from 1986 to 1987 they often rely on cross tabs that leaves many variables uncontrolled and the results subject to omitted variable bias j bachman et al 1984 use ordinary least squares ols regressions in which the drug use in the three years post high school is related to various characteristics such as living arrangements while an improvement over cross tabs ols applied to categorical dependent variables yields inefficient estimates see m nerlove and s press 1973 johnston et al used follow up surveys of a subsample drawn from each cohort they find the use of some drugs decline at older ages say 35 though they do not determine if the heavy users have died dropped out of the sample or have been rehabilitated the hss s initial restriction to high school seniors removes about 30 percent of the population who drop out of high school perhaps because of taking drugs studies based on the national institute of drug abuse nida sample of people 12 and older show some heavy drug use of people less than 17 years old see j d miller et al 1982 and nida 1985 richard clayton 1985 using the 1980 hss presents univariate regressions that shows the frequency of use of cocaine is positively related to lifetime marijuana use and days out of school in the past month but negatively related to high school grade point average h abelson and miller 1985 using the nida surveys covering 1974 82 show differences in the percentage using cocaine by education and race for lifetime 12 months and last month measures they find strong trends d kandel 1980 presents a recent survey of drinking and drug use among youth people in their late 30 s mature out of heroin use rather than die

the structure of ownership and the theory of the firm the separation of ownership from control produces a condition where the interests of owner and of ultimate manager may and often do diverge and where many of the checks which formerly operated to limit the use of power disappear in creating these new relationships the quasi public corporation may fairly be said to work a revolution it has divided ownership into nominal ownership and the power formerly joined to it thereby the corporation has changed the nature of profit seeking enterprise 1

interest groups and the size of government the results of the previous section estimates of a three equation model from 23 observations must obviously be regarded as tentative the consistent positive relationship between number of interest groups and size of government observed with changing sets of included independent variables changing samples of nations and treating the number of interest groups as either exogenous or codetermined does imply rather unequivocally that interest groups are able to influence public policies in such a manner as to lead to increased government size beyond helping to reinforce this conclusion the results of the previous section should be regarded as first steps in the development of a model of the polity that can explain participation in the political process by interest groups and citizens as well as the size of government

the price consideration model of brand choice the workhorse brand choice models in marketing are the multinomial logit mnl and nested multinomial logit nmnl these models place strong restrictions on how brand share and purchase incidence price elasticities are related in this paper we propose a new model of brand choice the price consideration pc model that allows more flexibility in this relationship in the pc model consumers do not observe prices in each period every week a consumer decides whether to consider a category only then does he she look at prices and decide whether and what to buy using scanner data we show the pc model fits much better than mnl or nmnl simulations reveal the reason the pc model provides a vastly superior fit to inter purchase spells

dual class ipos a theoretical analysis we consider an incumbent who wishes to sell equity to outsiders at an ipo to implement his firm s project he may be talented lower cost of effort comparative advantage in project implementation or untalented the project may have high intrinsically more valuable but showing less signs of success in the near term or low near term uncertainty under a single class share structure the incumbent has a greater chance of losing control to potential rivals if he undertakes the project with high near term uncertainty since outsiders may vote for the rival if they believe the project is not progressing well a dual class share structure allows the incumbent to have enough votes to prevail against any rival but may be misused by untalented incumbents to dissipate value our results help to explain firms choices between dual class and single class ipos and the post ipo operating performance of dual class versus single class firms

a structural model of the retail market for illicit drugs we estimate a model of illicit drugs markets using data on purchases of crack cocaine buyers are searching for high quality drugs but they determine drugs quality i e their purity only after consuming them hence sellers can rip off first time buyers or can offer higher quality drugs to induce buyers to purchase from them again in equilibrium a distribution of qualities persists the estimated model implies that if drugs were legalized in which case purity could be regulated and hence observable the average purity of drugs would increase by approximately 20 percent and the dispersion would decrease by approximately 80 percent moreover increasing penalties may raise the purity and affordability of the drugs traded by increasing sellers relative profitability of targeting loyal buyers versus first time buyers

portfolio management and appropriation of private benefits of control in many countries around the globe portfolio managers utilize well accepted models assuming that a partial stake of ownership is proportionally valued this assumption is incorrect in markets in which traded firms or publicly held firms are controlled by major owners who would take any possible measure to protect and maintain a lock on control so they can secure a sellable asset to another control seeker in this case estimation of key parameters such as volatility expected returns and diversification effect may be grossly distorted we would argue that a major trigger for the value of the benefits of control is the ability of control owners to transfer assets from their own portfolio to a controlled publicly traded firm while it is obvious that these transfers will take place if and only if it is beneficial to the control owners the impact on the minor shareholders may not necessarily be negative and may vary depending on several parameters thus the benefits of control are not entirely private i e appropriation and diversion of the resources of publicly traded firms for the benefit of the control owners this paper aims to model the effect of the benefits of control on the value of a minority held public firms it focuses on two related issues that are discussed in the literature on the benefits of control what drives the value of the benefits of control given the empirical evidence that control seekers are willing to pay a significant premium for control and secondly can these benefits be rationally modeled to better understand these issues it then models a specific drive on the part of control seekers who in addition to their stake in a publicly traded firm own a private portfolio it could be argued that they may transfer inferior investments to the public firms that they control exploiting less than perfect transparency however while they own this valuable option of transferring inferior investments into the public firm these actions may still be beneficial to the minority shareholders we establish a model and derive a simulation procedure that are applied to several cases in which transfers are made in exchange for cash or equity instances of full disclosure or partial transparency the likelihood that the control owners actions will be contested in court level of risk and other parameters then we will compare the results to empirical finding the final model will be greatly simplified so that the end formula can be easily used by practitioners