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Controlled-by-owner Firms, Mobility of Capital and Microeconomic Profit Rate Maximization


  • MESNARD, Louis de

    () (LATEC - CNRS - Université de Bourgogne)


When they actively control the firm, owners select the firm that has the best profit rate if the hypothesis of mobility of capital is adopted: controlled-by-owner firms are profit-rate-maximizing when sleeping-owner firms are pure-profit-maximizing. Both types are compared in monopoly, in perfect competition, in classical or in mixed duopoly. Always, controlled-by-owner firms have a lower output than comparable sleeping-owner firms. It only takes a fixed coefficient of equity capital to do that price plays no role for controlled-by-owner firms in perfect competition; in duopoly, it only takes a similar condition plus a linear demand to do that reaction functions vanish. and supply driven models) and the effect of an exogenous factor (final demand or added-value). The note recalls that another method is possible, the comparison of the stability of technical and allocation coefficients, generalized by the biproportional filter: if for a sector, after biproportional filtering, column coefficients are more stable than row coefficients, then this sector is declared as not supply-driven (but one cannot decide that it is demand-driven anyway), and conversely...

Suggested Citation

  • MESNARD, Louis de, 1999. "Controlled-by-owner Firms, Mobility of Capital and Microeconomic Profit Rate Maximization," LATEC - Document de travail - Economie (1991-2003) 9901, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
  • Handle: RePEc:lat:lateco:1999-01

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    References listed on IDEAS

    1. Martin, Christine A. & Witt, Stephen F., 1989. "Forecasting tourism demand: A comparison of the accuracy of several quantitative methods," International Journal of Forecasting, Elsevier, vol. 5(1), pages 7-19.
    2. Harvey,Andrew C., 1991. "Forecasting, Structural Time Series Models and the Kalman Filter," Cambridge Books, Cambridge University Press, number 9780521405737, March.
    3. Hans Franses, Philip, 1992. "Testing for seasonality," Economics Letters, Elsevier, vol. 38(3), pages 259-262, March.
    4. PICHERY, Marie-Claude & OUERFELLI, Chokri, 1998. "La non stationnarité dans les séries saisonnières : Application au tourisme tunisien," LATEC - Document de travail - Economie (1991-2003) 1998-09, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    5. Harvey, A. C., 1986. "The effects of seat belt legislation on British road casualities: A case study in structural modelling : A.C. Harvey and J. Durbing, Journal of the Royal Statistical Society, Series A 149 (1986) (in p," International Journal of Forecasting, Elsevier, vol. 2(4), pages 496-497.
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    More about this item


    Profit Rate; Firm; Control; Coordination; Objective;

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets


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