Companies’ Decisions for Profit Maximization: A Structural Model

Abstract

Huge analyses on firms data selected from public available databases accomplished the task to describe the size and growth of firms through interpolating functions. The structure and internal firms organization that lead to the optimal profit is a main matter of business studies and must take carefully into account internal work distribution and the subsequent productivity. Moreover factors external to firms, like as the evolution of markets and the availability of new technologies show their immediate bias on the wealth of the firms. In this paper a model is developed for a set of firms producing a single commodity. The shape of the productivity that leads to profit optimization is drawn and discussed. Furthermore the optimal time for the firm to renew its technology is established and consequences on the productivity are examined.