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Benefits of Ownership: A Theory of Vertical
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[6] Hart, O. and … allocation is non-trivial, c∗ negationslash= y, and
let t∗ = y−c∗. First notice that the expected utility Eu(t) ≡summationtexty p …(y)u(y −t(y))
and
V (y,t) ≡ (1−δ)u(y −t(y)) + δEu(t)
are strictly concave in t. Moreover, notice that Eu(0) = u and V (y,0) = (1 …