When do imperfectly competitive firms maximize profits? The lessons from a simple general equilibrium model with shareholders’ voting

Rim Lahmandi-Ayed and Didier Laussel ()

Post-Print from HAL

Abstract: We consider a general equilibrium model with vertical preferences, where workers and consumers are differentiated, respectively, by their sensitivity to effort and their intensity of preference for quality. We consider a monopoly of which the shares are owned by a fraction of the general population. The price is determined through a vote among all the shareholders. We identify necessary and sufficient conditions for (i) an absolute (relative) majority to vote for the profit maximizing price; (ii) an absolute (relative) majority to vote for a different price. We argue that the more concentrated the ownership the more likely it is that the firm charges the profit-maximizing price.

Keywords: General equilibrium; Profit maximization; Vertical preferences; Majority vote (search for similar items in EconPapers)
Date: 2018-10
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-01991962
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Journal of Mathematical Economics, 2018, 78, pp.6-12. ⟨10.1016/j.jmateco.2018.06.006⟩

Downloads: (external link)
https://amu.hal.science/hal-01991962/document (application/pdf)

Related works:
Journal Article: When do imperfectly competitive firms maximize profits? The lessons from a simple general equilibrium model with shareholders’ voting (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01991962

DOI: 10.1016/j.jmateco.2018.06.006

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().