Take the example of company X that is to be acquired by company Y, where company X is governed by proportionate equity ownership. Let’s assume that company X is owned by shareholders A (with 51% ownership) and B (with 49% ownership). Furthermore let A value his shares at $9/share and B value his shares at $11/share. If company Y offers $10/share for company X then this is sufficient to establish a voluntary transaction between these companies. While both companies (by weighted average) may be said to benefit, it is clear that this exchange is sub-optimal from the perspective of shareholder B.

Individual-based Pareto optimality is therefore not guaranteed for the free market exchange of co-owned property. Government, in theory, represents the greatest example of co-owned property within a nation.