Externalities, Monopoly and the Objective Function of the Firm
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 firmrm 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.
|Date of creation:||May 2005|
|Publication status:||Forthcoming in Economic Theory|
|Contact details of provider:|| Postal: Kingston, Ontario, K7L 3N6|
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Web page: http://qed.econ.queensu.ca/
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