A Theory of Return-Seeking Firms
AbstractWe introduce a theory of return-seeking firms to study the differences between this and standard profit-maximising models. In a competitive market return-maximising firms minimise average total costs leading to output choices independent of price movements. We investigate the potential for mark-ups over cost under both competitive and non-competitive market structures and characterise output and input choices under both, amongst a series of other interesting results. We also extend the model in the case of discrete output and input space and show what conditions are required of demand shifts for firms to modify their production plan.
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Bibliographic InfoPaper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 497.
Date of creation: 28 Jan 2014
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
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