The stakeholder corporation and social welfare

Marc Fleurbaey and Gregory Ponthiere

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: The stakeholder (or responsible) firm is defined in this paper as one that maximizes the (weighted or unweighted) sum of the surpluses of its customers and suppliers (including workers). We show that, although this objective is hard to empirically measure, it can be pursued by simple management rules that rely on constrained profit maximization. We find that unconstrained profit maximization gives a competitive edge to ordinary firms, but that stakeholder firms are better for social welfare and internalize several important effects of their activities on society. We also show that long term entry decisions should rely on profit modied by Pigouvian pricing of externalities, incidentally providing a novel justication for the polluter-pays principle.

Keywords: Stakeholder; Shareholder value; Profit; Pigou tax (search for similar items in EconPapers)
Date: 2023-09
Note: View the original document on HAL open archive server: https://hal.science/hal-03426120v2
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Published in Journal of Political Economy, 2023, 131 (9), ⟨10.1086/724318⟩

Downloads: (external link)
https://hal.science/hal-03426120v2/document (application/pdf)

Related works:
Journal Article: The Stakeholder Corporation and Social Welfare (2023)
Working Paper: The stakeholder corporation and social welfare (2023)
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:pseptp:hal-03426120

DOI: 10.1086/724318

Access Statistics for this paper

More papers in PSE-Ecole d'économie de Paris (Postprint) from HAL
Bibliographic data for series maintained by Caroline Bauer ().