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Monopoly Externalities and Non-Profit Maximising Firms

  • Kelsey, David

    (The University of Birmingham, UK)

  • Frank Milne

    (Queens University, Canada)

This paper provides a theory of a monopolist in general equilibrium. We assume that the firm's decisions are based on the preferences of shareholders and/or other stake-holders. We show that the monopolist will charge less than the profit-maximising price, since shareholders suffer part of the cost of a price rise if they are also consumers. If price discrimination is possible, the resulting equilibrium will be Pareto efficient. We use the model to examine the effects of increasing stake-holder representation in firms.� A related result shows that a non-profit firm will produce fewer negative externalities.

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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 113.

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Date of creation: 29 Aug 2002
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Handle: RePEc:ecj:ac2002:113
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