E-Mich - "The stakeholder corporation and social welfare"

Mardi intime de la Chaire Hoover par Marc Fleurbaey

The stakeholder firm is defined as one that maximizes the (weighted or unweighted) sum of surpluses of its customers and suppliers (including workers). It is shown that, although this objective is hard to empirically measure, it can be pursued by simple management rules that rely on constrained profit maximization. It is shown that unconstrained profit maximization gives a competitive edge to ordinary firms, but that stakeholder firms are better for social welfare and internalize several important effects of their activities on society. It is also shown that long term entry decisions should rely on profit modified by Pigouvian pricing of externalities.