Autore
Hammond, Peter J.

Titolo
The moral status of profits and other rewards: a perspective from modern welfare economics
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1991 - Fascicolo: 39 - Pagina iniziale: 1 - Pagina finale: 40

Standard neoclassical welfare economics justifies competitive profit maximization as the appropriate objective of a firm. Yet when income is being redistributed by lump-sum transfers in order to achieve distributive justice, the firm’s owners and managers are not entitled to keep anything beyond those “normal” profits which are payments for services rendered. With private information, however, profit maximization need not be so desirable even at prices reflecting social values. Indeed, even inefficient production can often be justified. And the appropriate distribution of profits is more complicated, since some of it is deserved by the firm’s owners as a form of incentive payment. The last part of the paper considers how these arguments change in intertemporal economies. It is also argued that valuing freedom for its own sake may make profits more acceptable than would otherwise be the case. Even so, not all the limitations discussed previously are removed.



Testo completo: http://hdl.handle.net/1814/378

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