The Effect of Strategic Firm Objectives on Competition
Pp. 170-181 (12)
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
Consumer surplus, Cournot game, mixed oligopoly, private firms,
public firms, socially concerned firms, partial cooperation, partial privatization,
strategic firm objectives, welfare.
University of Magdeburg, Faculty of Economics and Management, Universitaetsplatz 2, 39106 Magdeburg, Germany.