The Behavior of Firms

Steven E. Landsburg

Chapter 5 in Price Theory and Applications, 2024, pp 145-168 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Individuals demand goods and services; firms supply them. Just as our study of individual consumers’ behavior led us to a deeper understanding of demand, a study of firms’ behavior will lead us to a deeper understanding of supply.All firms are created and owned by individuals. Some, like many corner bodegas, have one owner, whereas others, like the General Electric Corporation, have many thousands of owners (in this case, the General Electric stockholders). In some firms, the owner or owners exert considerable day-to-day control over operations, whereas in others, salaried managers serve these functions. With such diversity in the size, nature, and organization of firms, you might wonder how it could be possible to make any statements at all about the behavior of firms in general…

Keywords: Microeconomics; Price Theory; Supply and Demand; Demand Curve; Adverse Selection; Budget Line; Indifference Curve; Common Property; Competition; Competitive Industry; Constant-cost Industry; Consumer Surplus; Producer Surplus; Social Gain; Social Welfare; Efficiency Criterion; Economic Efficiency; Cost; Price; Deadweight Loss; Price Ceiling; Tariff; Rationing; Quotas; Equimarginal Principle; Price Discrimination; Monopoly; Two-part Pricing; Two-part Tariff; Fishery; Collusion; Income Effect; Substitution Effect; Normal Good; Inferior Good; Giffen Good; Externality; Property Right; Coase Theorem; Transactions Cost; Law of Demand; Marginal Cost; Marginal Revenue; Marginal Value; Market Failure; Moral Hazard; Nash Equilibrium; Normative Criterion; Positive Economics; Oligopoly; Hayek; Social Cost; Economics of Information; Sales Tax (search for similar items in EconPapers)
JEL-codes: D D04 D4 L11 (search for similar items in EconPapers)
Date: 2024
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