Baumol’s Theory of Sales Revenue Maximisation

A. Koutsoyiannis
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A. Koutsoyiannis: University of Waterloo

Chapter 15 in Modern Microeconomics, 1975, pp 325-351 from Palgrave Macmillan

Abstract: Abstract W. J. Baumol suggested sales revenue maximisation as an alternative goal to profit maximisation.1 He presented two basic models: the first is a static single-period model, the second is a multi-period dynamic model of growth of sales revenue maximisation. Each model has two versions, one without and one with advertising activities. We will first present these models, examine the predictions of Baumol’s theory in various situations, and then discuss the empirical evidence from research directed to the verification of the sales maximisation hypothesis. Finally, we state some criticisms of Baumol’s theory.

Keywords: American Economic Review; Demand Curve; Profit Maximizer; Marginal Revenue; Sales Revenue (search for similar items in EconPapers)
Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-15603-0_15

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DOI: 10.1007/978-1-349-15603-0_15

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