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Private Benefits and Product Market Competition

Published online by Cambridge University Press:  09 January 2015

Jacques Thépot
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Summary

The impact of private benefits extraction on the values of oligopolistic firms is analyzed. Private benefits are assumed to generate costs which are passed through the organizational structure and create price distortion in the downstream product market. We prove that this may affect the profit (i.e. the market value) of the firms in a positive sense since the intensity of rivalry is curbed by the cost increase.

In oligopoly, private benefits extraction may enhance the profits while still generating a welfare loss: this suggests that corporate governance cannot be divorced from competition policy in industries where managerial opportunism generates expropriation costs.

Cet article traite de l'influence des bénéfices privés sur la valeur des entreprises en situation d'oligopole. Les bénéfices privés sont supposés générer des coûts qui sont transmis à travers la structure organisationnelle. Ils créent ainsi des distorsions de prix sur le marché de produits en aval. Nous montrons que cela peut affecter positivement le résultat (c'est-à-dire la valeur de marché) des entreprises puisque l'intensité de la concurrence est réduite par l'augmentation des coûts unitaires. En situation d'oligopole, l'extraction des bénéfices privés peut améliorer les profits tout en induisant une perte de bien-être : cela suggère que la gouvernance d'entreprise ne peut pas être dissociée de la politique de la concurrence, dans les secteurs où l'opportunisme managérial se traduit par des coûts d'exploitation.

Keywords

Private BenefitsOligopolyAgency CostG38D43bénéfices privésoligopolecoût d’agenceG38D43
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 79 , Issue 3 , September 2013 , pp. 5 - 24
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2013 

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Footnotes

*

EM Strasbourg Business School, LARGE, 61, avenue de la Forêt Noire, 67085 Strasbourg cedex, France, e-mail : [email protected], August 14, 2013.

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