Abstract
I show that in a global market for corporate control straightforward profit maximization, not maximizing a weighted sum of profits and sales, is the dominant solution of the game if management assigns decisions on output and the input of productive factors to different departments within the firm. In this framework the cost function depends on the goal. Average costs decline either by offering lower wage rates or by raising total factor productivity. This modeling helps explain recent developments in industry, such as the pursuit of shareholder value and also the decline of wages and structural unemployment.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
