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Production theory with profit‐constrained revenue‐maximization: The duality approach
Author(s) -
Kahava,
Nitzan Shmuel
Publication year - 1988
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090090403
Subject(s) - profit maximization , mathematical economics , profit (economics) , maximization , economics , duality (order theory) , revenue , constraint (computer aided design) , microeconomics , production theory , production (economics) , consumption (sociology) , neoclassical economics , mathematics , finance , social science , geometry , discrete mathematics , sociology
This paper derives a general version of Baumol's production theory, where the main behavioral assumption is ‘revenue maximization subject to a profit constraint’ instead of ‘profit maximization’. This theory turns out to be analogous to the neoclassical (competitive) production and consumption theories. Employing the fruitful duality approach it is presented here in a unified and very economical form that provides a complete and general analysis of the comparative static behavior of Baumol's firm.