Firms` Strategic Decisions: Theoretical and Empirical Findings

Volume: 1

The Effect of Strategic Firm Objectives on Competition

Author(s): Daniel Cracau

Pp: 170-181 (12)

DOI: 10.2174/9781681080383115010014

* (Excluding Mailing and Handling)


I present a generalized form of firms’ objective function. Besides classical own profit maximization, I add two distinct concerns: consumer surplus and competitors’ profits. This generalization can account for public and partially privatized firms, socially concerned firms as well as partially cooperating firms. I study a simple duopoly game to compare and discuss the effects of both concerns on equilibrium outcomes.

Keywords: Consumer surplus, Cournot game, mixed oligopoly, private firms, public firms, socially concerned firms, partial cooperation, partial privatization, strategic firm objectives, welfare.

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