What Makes Business Going? Accounting Profit vs Economic Profit

Exterior Calculus: Economic Profit Dynamics

A mathematical model for the Dynamics of Economic Profit is constructed by proposing a characteristic differential oneform for this dynamics (analogous to the action in Hamiltonian dynamics). After processing this form with exterior calculus, a pair of characteristic differential equations is generated and solved for the rate of change of profit P as a function of revenue R (t) and cost C (t). ...

Economic profit , NPV , and CAPM

The notion of Net Present Value (NPV) is thought to formally translate the notion of economic profit, where the discount rate is the cost of capital. The latter is the expected rate of return of an equivalent-risk alternative that the investor might undertake and is often found by making recourse to the Capital Asset Pricing Model. This paper shows that the notions of disequilibrium NPV and eco...

Corporate Profit, Entrepreneurship Theory and Business Ethics

Economic profit is produced by entrepreneurs, those special individuals able to detect and seize as yet unexploited market opportunities. In general capitalist firms manage to deliver positive profits even in the most competitive environments. They can do so thanks to internal entrepreneurs, a subset of their employees able to drive change and develop innovation in the workplace. This paper arg...

Profit-Sharing Regulation: An Economic Appraisal

The stock market, take-over bidders, executive pay setters, perhaps Stephen Littlechild himself, even last summer’s weather, all seem to have been undermining RPI–X price-cap regulation. Until recently, price-cap regulation was regarded as demonstrably superior to US-style rate-of-return regulation, and regulatory reform in several countries has embraced price-cap regulation. But in Britain, wh...

What is the profit in driver education?