ABSTRACT
It was argued in Chapter 8 that in managerial firms – that is, firms in which there is some divorce between ownership and control – managers may have some opportunity, particularly where competition is restricted, to pursue their own objectives at the expense of profits and thus may not seek to maximize profits. Our subsequent analysis has so far ignored this possibility except for the brief discussion of X-inefficiency in the context of monopoly. An important strand in the more recent developments in the theory of the firm has, however, been concerned with exploring the implications of alternative objectives to profit maximization for the behaviour of firms and in this chapter we consider some of these developments.
