Firms` Strategic Decisions Theoretical and Empirical Findings

Volume: 1

Indexed in: EBSCO.

This eBook presents recent case studies on firms and their strategy employed in specific scenarios and industries. Readers will find, in this volume, an analysis of oligopolistic industries done by ...
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The Effect of Strategic Firm Objectives on Competition

Pp. 170-181 (12)

Daniel Cracau

Abstract

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.

Affiliation:

University of Magdeburg, Faculty of Economics and Management, Universitaetsplatz 2, 39106 Magdeburg, Germany.