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Externalities, Monopoly and the Objective Function of the Firm


David Kelsey


University of Exeter Business School - Department of Economics

Frank Milne


Queen's University - Department of Economics
July 21, 2004

University of Birmingham Economics Working Paper No. 02-01

Abstract:     
This paper provides a theory of general equilibrium with externalities and/or monopoly. We assume that the firm's decisions are based on the preferences of shareholders and/or other stakeholders. Under these assumptions a firm will produce fewer negative externalities than the comparable profit maximising firm. In the absence of externalities, equilibrium with a monopoly will be Pareto efficient if the firm can price discriminate. The equilibrium can be implemented by a 2-part tariff.

Number of Pages in PDF File: 35

Keywords: Externality, general equilibrium, 2-part tariff, objective function of the firm

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Date posted: April 15, 2005  

Suggested Citation

Kelsey, David and Milne, Frank, Externalities, Monopoly and the Objective Function of the Firm (July 21, 2004). University of Birmingham Economics Working Paper No. 02-01. Available at SSRN: http://ssrn.com/abstract=692064 or http://dx.doi.org/10.2139/ssrn.692064

Contact Information

David Kelsey (Contact Author)
University of Exeter Business School - Department of Economics ( email )
Streatham Court
Exeter, Devon EX4 4PU
United Kingdom
013 9226 2536 (Phone)
HOME PAGE: http://people.exeter.ac.uk/dk210/
Frank Milne
Queen's University (Canada) - Department of Economics ( email )
Feedback to SSRN (Beta)


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