Bi-criteria utility functions: Analytical considerations and implications in the short-run labour market

Abstract An analytical framework to address the optimisation of bi-criteria utility functions u ( S , B ) defined in the sales revenue–profit space is presented. Some of the macroeconomics implications underlying these kinds of utility functions are elicited. Thus, the short-run aggregate demand for labour in a context where firms maximise a utility function u ( S , B ) is obtained and compared with the classic demand for labour predictions derived from a profit maximisation behaviour.

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