May 26, Without Advertisement. According to Baumol, with the separation of ownership and control in Morden Corporation, managers seek prestige and higher salaries by trying to expand company sales even at the expense of profits. Thus, according to baumol, revenue or sales maximisation rather than profit maximisation is consistent with the actual behavior of firms. Baumol cites evidence of suggest that shot-run revenue maximization may be consistent with the long-run profit maximization.

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Published in: Education. Full Name Comment goes here. Are you sure you want to Yes No. Jobin Francis. Show More. No Downloads. Views Total views. Actions Shares. Embeds 0 No embeds. No notes for slide. Prabha Panth, Osmania University Hyderabad 2. Salaries and perks to managers depend on sales, not profits. Banks give loans to firms with more sales, 3. Managers prefer steady level of profits, not maximum profits which are difficult to maintain.

Managers wish to avoid risky ventures that may temporarily increase profits. Prabha Panth 3 4. Single time period, 2. Oligopoly firm, 3. Sales Maximisation objective, 4. Downward sloping D-curve, Prabha Panth 4 5. Profit constraint. Prabha Panth 6 7. Other firms may also lower P, leading to P wars. Prabha Panth 8. You just clipped your first slide! Clipping is a handy way to collect important slides you want to go back to later. Now customize the name of a clipboard to store your clips.

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Sales Maximization Theory

Baumol's Theory of Sales Revenue Maximisation. Marris Growth Maximization Model:. Opportunity cost principle. Principle of time perspective.


Baumol’s Theory of Sales Revenue Maximisation

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