Controlled-by-owner firms, mobility of capital and microeconomic profit rate maximization

Louis de Mesnard (1)

1 LATEC - Laboratoire d'Analyse et de Techniques Economiques [UMR 5118]

When they actively control the firm, owners select the firm that has the best profit rate if the hypothesis of mobility of capital is adopted: controlled-by-owner firms are profit-rate-maximizing when sleeping-owner firms are pure-profit-maximizing. Both types are compared in monopoly, in perfect competition, in classical or in mixed duopoly. Always, controlled-by-owner firms have a lower output than comparable sleeping-owner firms. It only takes a fixed coefficient of equity capital to do that price plays no role for controlled-by-owner firms in perfect competition; in duopoly, it only takes a similar condition plus a linear demand to do that reaction functions vanish.

Mots clés: economics; economic theory; humanities social sciences

Mots clés: sciences humaines et sociales

Domaines: Economies et finances

Louis de Mesnard. Controlled-by-owner firms, mobility of capital and microeconomic profit rate maximization. [Research Report] Laboratoire d'analyse et de techniques économiques(LATEC). 1999, 37 p., Figure, ref. bib. : 26 ref. ⟨hal-01527141⟩