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The Objective of an Imperfectly Competitive Firm and Constrained Pareto Efficiency

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  • Egbert Dierker

    (Universitaet Wien)

  • Hildegard Dierker

    (Universitaet Wien)

  • Birgit Grodal

    (Kobenhavns Universitet)

Abstract

We consider a simple model of a firm acting strategically on behalf of its shareholders. The price normalization problem arising in general equilibrium models of imperfect competition is overcome by using the concept of real wealth maximization. This concept is based on shareholders' aggregate demand and does not involve any comparison of utility profiles that shareholders can possibly obtain. In this paper we explore the efficiency properties of real wealth maximizing strategies for the group of shareholders.

Suggested Citation

  • Egbert Dierker & Hildegard Dierker & Birgit Grodal, 2000. "The Objective of an Imperfectly Competitive Firm and Constrained Pareto Efficiency," Econometric Society World Congress 2000 Contributed Papers 1383, Econometric Society.
    • Handle: RePEc:ecm:wc2000:1383
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