Objectives of an Imperfectly Competitive Firm: A Surplus Approach
AbstractWe consider a firm acting strategically on behalf of its shareholders. The price normalization problem arising in general equilibrium models of imperfect competition can be overcome by using the concept of real wealth maximization. This concept is based on shareholders' aggregate demand and does not involve any utility comparisons. We explore the efficiency properties of real wealth maxima for the group of shareholders. A strategy is called S-efficient (S stands for shareholders) if there is no other strategy such that shareholders' new total demand can be redistributed in a way that all shareholders will be better off. Our main result states that the set of real wealth maximizing strategies coincides with the set of S-efficient strategies provided that shareholders' social surplus is concave. Thus, even if a firm does not know the preferences of its shareholders it can achieve S-efficiency by selecting a real wealth maximizing strategy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0007.
Date of creation: Nov 2000
Date of revision:
Contact details of provider:
Web page: http://www.univie.ac.at/vwl
Other versions of this item:
- Egbert Dierker & Hildegard Dierker & Birgit Grodal, 2000. "Objectives of an Imperfectly Competitive Firm: A Surplus Approach," CIE Discussion Papers 2000-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-01-21 (All new papers)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Jean-Marc Bonnisseau & Oussama Lachiri, 2004.
"On the objective of firms under uncertainty with stock markets,"
Cahiers de la Maison des Sciences Economiques
b04122, Université Panthéon-Sorbonne (Paris 1).
- Bonnisseau, Jean-Marc & Lachiri, Oussama, 2004. "On the objective of firms under uncertainty with stock markets," Journal of Mathematical Economics, Elsevier, vol. 40(5), pages 493-513, August.
- Jean-Marc Bonnisseau & Michael Florig, 2005.
"Non-existence of Duopoly Equilibria: A Simple Numerical Example,"
Journal of Economics,
Springer, vol. 85(1), pages 65-71, 07.
- Bonnisseau, J.-M. & Florig, M., 2000. "Non-Existence of Duopoly Equilibria : A Simple Numerical Example," Papiers d'Economie MathÃÂ©matique et Applications 2000.90, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Juan Rosellón & Dagobert L. Brito, 2008.
"Lumpy Investment in Regulated Natural Gas Pipelines: An Application of the Theory of The Second Best,"
Documentos de Trabajo
DTE 426, CIDE, Division de Economia.
- Dagobert Brito & Juan Rosellón, 2011. "Lumpy Investment in Regulated Natural Gas Pipelines: An Application of the Theory of the Second Best," Networks and Spatial Economics, Springer, vol. 11(3), pages 533-553, September.
- Dagobert L. Brito & Juan Rosellón, 2010. "Lumpy Investment in Regulated Natural Gas Pipelines: An Application of the Theory of the Second Best," Discussion Papers of DIW Berlin 1024, DIW Berlin, German Institute for Economic Research.
- Camelia Bejan, 2008. "The objective of a privately owned firm under imperfect competition," Economic Theory, Springer, vol. 37(1), pages 99-118, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paper Administrator).
If references are entirely missing, you can add them using this form.