Controlled-by-owner firms, mobility of capital and microeconomic profit rate maximization

Louis de Mesnard

Working Papers from HAL

Abstract: 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.

Keywords: economics; economic theory; humanities social sciences; sciences humaines et sociales (search for similar items in EconPapers)
Date: 1999
Note: View the original document on HAL open archive server: https://hal.science/hal-01527141v1
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Published in [Research Report] Laboratoire d'analyse et de techniques économiques(LATEC). 1999, 37 p., Figure, ref. bib. : 26 ref

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Working Paper: Controlled-by-owner Firms, Mobility of Capital and Microeconomic Profit Rate Maximization (1999)
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