Externalities, Monopoly and the Objective Function of the Firm
University of Exeter Business School - Department of Economics
Queen's University - Department of Economics
July 21, 2004
University of Birmingham Economics Working Paper No. 02-01
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 firmworking papers series
Date posted: April 15, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.656 seconds