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Externalities, Monopoly and the Objective Function of the Firm

Author

Listed:
  • David Kelsey

    (Department of Economics, University of Exeter and University of Birmingham)

  • Frank Milne

    (Department of Economics, Queens University, Canada.)

Abstract

This paper provides a theory of general equilibrium with externalities and/or monopoly. We assume that the firm's decisions are based on the preferences of shareholders and/or other stakeholders. Under these assumptions, a firm will produce fewer negative externalities than the comparable profit maximizing firm. In the absence of externalities, equilibrium with a monopoly will be Pareto efficient if the firm can price discriminate. The equilibrium can be implemented by a 2-part tariff.

Suggested Citation

  • David Kelsey & Frank Milne, 2006. "Externalities, Monopoly and the Objective Function of the Firm," Discussion Papers 0604, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:0604
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    File URL: https://exetereconomics.github.io/RePEc/dpapers/DP0604.pdf
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    Citations

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    Cited by:

    1. David Kelsey & Frank Milne, 2008. "Imperfect Competition and Corporate Governance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(6), pages 1115-1141, December.
    2. Camelia Bejan & Florin Bidian, 2012. "Ownership structure and efficiency in large economies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 571-602, August.
    3. L. Marsiliani & X. Liu & Л. Марсилиани & К. Лю, 2017. "Структура Акционерного Капитала И Степень Эксплуатации Нефтяных Месторождений // Share-Ownership Distribution And Extraction Rate Of Petroleum In Oil Fields," Review of Business and Economics Studies // Review of Business and Economics Studies, Финансовый Университет // Financial University, vol. 5(1), pages 42-53.
    4. Steven Baker & Burton Hollifield & Emilio Osambela, 2019. "Asset Prices and Portfolios with Externalities," 2019 Meeting Papers 1255, Society for Economic Dynamics.
    5. David Kelsey & Frank Milne, 2010. "Takeovers and cooperatives: governance and stability in non-corporate firms," Journal of Economics, Springer, vol. 99(3), pages 193-209, April.
    6. Milne, Frank & Kelsey, David, 2006. "Takeovers and Cooperatives," Queen's Economics Department Working Papers 273589, Queen's University - Department of Economics.
    7. Tikoudis, Ioannis, 2023. "Revisiting the Pigouvian tax in urban roads: Housing supply restrictions, leaking profits and spatial inequality," Economics of Transportation, Elsevier, vol. 35(C).

    More about this item

    Keywords

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    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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