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Journal Articles Journal of Political Economy Year : 2023

The stakeholder corporation and social welfare

Abstract

The stakeholder (or responsible) firm is defined in this paper as one that maximizes the (weighted or unweighted) sum of the surpluses of its customers and suppliers (including workers). We show that, although this objective is hard to empirically measure, it can be pursued by simple management rules that rely on constrained profit maximization. We find 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. We also show that long term entry decisions should rely on profit modied by Pigouvian pricing of externalities, incidentally providing a novel justication for the polluter-pays principle.
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Avant la publication

Dates and versions

hal-03426120 , version 1 (12-11-2021)
hal-03426120 , version 2 (17-02-2023)

Licence

Attribution - NonCommercial - NoDerivatives

Identifiers

Cite

Marc Fleurbaey, Grégory Ponthière. The stakeholder corporation and social welfare. Journal of Political Economy, In press, ⟨10.2139/ssrn.3900451⟩. ⟨hal-03426120v2⟩
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