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Market distortions and corporate governance

Author

Listed:
  • David Kelsey

    (Department of Economics, University of Exeter)

  • Frank Milne

    (Department of Economics, Queens University, Canada.)

Abstract

This paper studies corporate governance when a firm operates in imperfect markets. We derive firms' decisions from utility maximisation by individuals. This reduces the usual monopoly distortion. Corporate governance can effect the equilibrium in the product (or input) markets. This enables us to endogenise the objective function of the firm. 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. We present a more abstract model of governance in the presence of market distortions and discuss its implications for the governance of universities.

Suggested Citation

  • David Kelsey & Frank Milne, 2005. "Market distortions and corporate governance," Discussion Papers 0503, Exeter University, Department of Economics.
  • Handle: RePEc:exe:wpaper:0503
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    File URL: http://people.exeter.ac.uk/cc371/RePEc/dpapers/DP0503.pdf
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    More about this item

    Keywords

    corporate governance; stakeholder; strategic delegation; economics of universities.;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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