Modelling Policy Issues in a World of Imperfect Competition
General equilibrium theory constitutes a sound basis for the discussion of policy issues if firms do not have market power. However, if firms influence prices strategically, the concept of profits loses its meaning due to the price normalization problem. Hence, it is unclear how to model the behavio...
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| Veröffentlicht in: | The Scandinavian journal of economics 1998-03, Vol.100 (1), p.153-179 |
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| container_title | The Scandinavian journal of economics |
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| creator | Dierker, Egbert Grodal, Birgit |
| description | General equilibrium theory constitutes a sound basis for the discussion of policy issues if firms do not have market power. However, if firms influence prices strategically, the concept of profits loses its meaning due to the price normalization problem. Hence, it is unclear how to model the behavior of oligopolistic firms. In order to provide a conceptual foundation for the analysis of policy issues in the case of imperfect competition, we discuss ways to formulate the objective of a strategic firm. In particular, we investigate the concept of real wealth maximization that is based on profits as well as on shareholders' aggregate demand. |
| doi_str_mv | 10.1111/1467-9442.00095 |
| format | Article |
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| source | Jstor Complete Legacy; RePEc; Wiley Online Library Journals Frontfile Complete; Business Source Complete; Periodicals Index Online |
| subjects | Aggregate demand Budget line Competition Consumer economics Consumer surplus Economic models Economic theory Economic utility Equilibrium theory Financial budgets Imperfect competition Oligopoly Profit Profitability Profits Public policy Real wealth Shareholders Studies Wealth |
| title | Modelling Policy Issues in a World of Imperfect Competition |
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