Externalities, Monopoly and the Objective Function of the Firm
AbstractThis paper provides a theory of general equilibrium with externalities and/or monopoly. We assume that the firm's decisions are based on the preferences of shareholders and/or other stakeholders. Under these assumptions, a firm will produce fewer negative externalities than the comparable profit maximizing firm. In the absence of externalities, equilibrium with a monopoly will be Pareto efficient if the firm can price discriminate. The equilibrium can be implemented by a 2-part tariff.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0604.
Date of creation: Jun 2006
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Externality; general equilibrium; 2-part tariff; objective function of the firm.;
Other versions of this item:
- David Kelsey & Frank Milne, 2006. "Externalities, monopoly and the objective function of the firm," Economic Theory, Springer, vol. 29(3), pages 565-589, November.
- Frank Milne & David Kelsey, 2005. "Externalities, Monopoly and the Objective Function of the Firm," Working Papers 1078, Queen's University, Department of Economics.
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
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