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Imperfect Competition and Corporate Governance

  • DAVID KELSEY
  • FRANK MILNE

This paper studies the objective function of the firm in imperfectly competitive industries. If those involved in decisions are also consumers the usual monopoly distortion is reduced. In oligopolistic industries, this may give the firm a strategic advantage and hence, in the right circumstances, will increase profit. If the firm cannot commit not to change its constitution, we find a Coase-like result where all market power is lost in the limit. This enables us to endogenise the objective function of the firm. Finally we present a more abstract model of governance in the presence of market distortions. Copyright � 2008 Wiley Periodicals, Inc..

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Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 10 (2008)
Issue (Month): 6 (December)
Pages: 1115-1141

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Handle: RePEc:bla:jpbect:v:10:y:2008:i:6:p:1115-1141
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