dc.contributor.author | Sabarwal, Tarun | |
dc.date.accessioned | 2012-04-25T22:21:29Z | |
dc.date.available | 2012-04-25T22:21:29Z | |
dc.date.issued | 2004-08-11 | |
dc.identifier.citation | Sabarwal, Tarun. (2004) A Consistent Firm Objective When Markets are Incomplete: Profit Maximization, Econometric Society 2004 North American Summer Meetings, Econometric Society. | |
dc.identifier.uri | http://hdl.handle.net/1808/9188 | |
dc.description.abstract | In economies with private firm ownership, when markets are incomplete, and firm shareholders change over time, there is no broad agreement on what ought to be a firm's objective. It is shown that ex-post, profit maximization is consistent with shareholder preferences in such economies; that is, along the equilibrium path, in every period and state of the world, every coalition of a firm's shareholders in that period and state approves a profit-maximizing production plan. This result is shown using natural assumptions about shareholder preferences and shareholder control, and it applies to cases when shareholders within a firm and across firms can form coalitions, and when stock trading can be ex-dividend or cum-dividend, and with a combination of both. This result can help provide a foundation for formulating a theory of the firm when markets are incomplete; a theory based on primitives of shareholder preferences and shareholder control that are to be necessarily satisfied in economies with private firm ownership. | |
dc.publisher | Econometric Society | |
dc.relation.ispartofseries | Econometric Society 2004 North American Summer Meetings;141 | |
dc.relation.isversionof | http://EconPapers.repec.org/RePEc:ecm:nasm04:141 | |
dc.subject | Incomplete markets | |
dc.subject | Firm objective | |
dc.subject | Profit maximization | |
dc.subject | Shareholder preferences | |
dc.title | A Consistent Firm Objective When Markets are Incomplete: Profit Maximization | |
dc.type | Working Paper | |
kusw.oastatus | na | |
kusw.oapolicy | This item does not meet KU Open Access policy criteria. | |
dc.rights.accessrights | openAccess | |