05/21/2020Quarterly Journal of Austrian EconomicsEr’el Granot
Reswitching indicates that the average production period is not necessarily a decreasing function of the interest rate. Granot's generic model of the structure of production shows behavior resembling reswitching.
Valuation of businesses must be based on appraisement, investment appraisal, and— terra incognita in Austrian economics—negotiation. Discounted cash flow and "relative valuation" methods are well-suited for negotiation purposes.
This paper elaborates and defends the concept of owner's rent as a return to the technical decision-making function of the owner of the firm. It argues that owner's rent is a return to unhirable labor and is separate and distinct from the profit earned by the owner in his entrepreneurial function...