The Objective of an Imperfectly Competitive Firm and Constrained Pareto Efficiency
نویسندگان
چکیده
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. ∗Institut für Wirtschaftswissenschaften, Universität Wien, Hohenstaufengasse 9, A-1010 Wien, Austria †Institut für Wirtschaftswissenschaften, Universität Wien, Hohenstaufengasse 9, A-1010 Wien, Austria ‡Centre of Industrial Economics and Økonomisk Institut, Københavns Universitet, Studiestræde 6, DK-1455 København, Denmark
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Working Papers Department of Economics University of Vienna Objectives of an Imperfectly Competitive Firm: a Surplus Approach
We consider a firm acting strategically on behalf of its shareholders. The price normalization problem arising in general equilibrium models of imperfect competition can be overcome by using the concept of real wealth maximization. This concept is based on shareholders’ aggregate demand and does not involve any utility comparisons. We explore the efficiency properties of real wealth maxima for ...
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