A Theory of Return-Seeking Firms

Cameron Murray () and Brendan Markey-Towler

No 497, Discussion Papers Series from University of Queensland, School of Economics

Abstract: We introduce a theory of return-seeking firms to study the differences between this and standard profit-maximising models. In a competitive market return-maximising firms minimise average total costs leading to output choices independent of price movements. We investigate the potential for mark-ups over cost under both competitive and non-competitive market structures and characterise output and input choices under both, amongst a series of other interesting results. We also extend the model in the case of discrete output and input space and show what conditions are required of demand shifts for firms to modify their production plan.

Date: 2014-01-28
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Related works:
Journal Article: A theory of return‐seeking firms (2019)
Working Paper: A Theory of Return-Seeking Firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:497

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