Chapter 11

The Effect of Strategic Firm Objectives on Competition

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.

Total Pages: 170-181 (12)

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