Abstract
The preceding chapters have reviewed the kinds of suggestions for modifying the theory of the firm that have been made in the past fifteen years, examined possible limitations of the profit maximization assumption, and suggested an alternative motivational foundation that would appear to be generally consistent with managerial behavior (broadly conceived). The objective now is to develop a model that is responsive to some of the criticisms of the classical theory of the firm by providing analytical content to the motivational assumptions given in Chapter 3. This involves the construction of utility functions for the firm that make the notion of ‘expense preference’ explicit. Invoking the assumption of maximizing behavior, equilibrium and comparative statics properties of the models are obtained.
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References
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© 1972 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Williamson, O.E. (1972). Managerial Discretion Models. In: Rowley, C.K. (eds) Readings in Industrial Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-15484-5_5
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DOI: https://doi.org/10.1007/978-1-349-15484-5_5
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-10957-1
Online ISBN: 978-1-349-15484-5
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