Economic Theory Commons^™

The Role Of Valuation Specialists: Telling It Like It Is Or Telling It Like It Ought To Be, Michael Sack Elmaleh

Michael Sack Elmaleh

While the buying and selling of businesses based on formulas may not be the soundest method of pricing a business the more rigorous methods do not always provide the best guidance either. Ideally prospective buyers should have knowledge of both formula methods and the more rigorous approaches.

In Defence Of Exploitation, Justin Schwartz

Justin Schwartz

The concept of exploitation is thought to be central to Marx's Critique of capitalism. John Roemer, an analytical (then-) Marxist economist now at Yale, attacked this idea in a series of papers and books in the 1970s-1990s, arguing that Marxists should be concerned with inequality rather than exploitation -- with distribution rather than production, precisely the opposite of what Marx urged in The Critique of the Gotha Progam.

This paper expounds and criticizes Roemer's objections and his alternative inequality based theory of exploitation, while accepting some of his criticisms. It may be viewed as a companion paper to my What's …

Capital Structure And Product-Market Rivalry: How Do We Reconcile Theory And Evidence?, Dan Kovenock, Gordon Phillips

Economics Faculty Articles and Research

This paper presents empirical evidence on the interaction of capital structure decisions and product market behavior. We examine when firms recapitalize and increase the proportion of debt in their capital structure. The evidence in this paper shows that firms with low productivity plants in highly concentrated industries are more likely to recapitalize and increase debt financing. This finding suggests that debt plays a role in highly concentrated industries where agency costs are not significantly reduced by product market competition. Following the empirical evidence we introduce the "strategic investment" effects of debt and argue that this effect, in conjunction with agency …

Functional Explanation And Metaphysical Individualism, Justin Schwartz

Justin Schwartz

A number of (present or former) analytical Marxists, such as Jon Elster, have argued that functional explanation has almost no place in the social sciences. (Although the discussion is framed in terms of a debate among analytical Marxists, the point is quite general, and Marxism is used for illustrative purposes.) Functional explanation accounts for what is to be explained by reference to its function; thus, sighted organism have eyes because eyes enable them to see. Elster and other critics of functional explanation argue that this pattern of explanation is inconsistent with "methodological individualism," the idea, as they understand it, that …

Price Determination In A Competitive Industry With Costly Information And A Production Lag, Reuven Glick, Clas Wihlborg

Business Faculty Articles and Research

We analyze the role of information for price and output adjustment when competitive firms with rational expectations cannot directly distinguish between industrywide and firm-specific cost disturbances. Firms may become informed about industrywide cost conditions by acquiring information at a cost. The sensitivity of price and output to cost disturbances decreases as more firms choose to purchase information. The equilibrium industry share of informed firms increases as the cost of information falls and total cost variability increases. The equilibrium share of informed firms is largest when there is a comparable degree of variability in both industrywide and firm-specific costs.