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

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.
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https://hal-amu.archives-ouvertes.fr/hal-01991962
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Submitted on : Monday, January 31, 2022 - 9:30:48 AM
Last modification on : Saturday, February 19, 2022 - 6:30:22 PM
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Rim Lahmandi-Ayed, Didier Laussel. When do imperfectly competitive firms maximize profits? The lessons from a simple general equilibrium model with shareholders’ voting. Journal of Mathematical Economics, Elsevier, 2018, 78, pp.6-12. ⟨10.1016/j.jmateco.2018.06.006⟩. ⟨hal-01991962⟩

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