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Mark-up and Capital Structure of the Firm facing Uncertainty

Author

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  • Chatelain

    (University of Orleans)

Abstract

This note shows that, with pre-set price and capital decisions of firms facing uncertainty and financial market imperfections, price, mark up and the expected degree of capacity utilization (resp. capital) decreases (resp. increases) with the firm internal net worth.

Suggested Citation

  • Chatelain, 2004. "Mark-up and Capital Structure of the Firm facing Uncertainty," Finance 0404005, EconWPA.
  • Handle: RePEc:wpa:wuwpfi:0404005
    Note: Type of Document - pdf; pages: 8
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    File URL: http://econwpa.repec.org/eps/fin/papers/0404/0404005.pdf
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    References listed on IDEAS

    as
    1. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 211-248, April.
    2. James A. Kahn, 1992. "Why is Production More Volatile than Sales? Theory and Evidence on the Stockout-Avoidance Motive for Inventory-Holding," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 481-510.
    3. Chevalier, Judith A & Scharfstein, David S, 1996. "Capital-Market Imperfections and Countercyclical Markups: Theory and Evidence," American Economic Review, American Economic Association, vol. 86(4), pages 703-725, September.
    4. Paul Klemperer, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 375-394.
    5. Oliver Hart & John Moore, 1994. "A Theory of Debt Based on the Inalienability of Human Capital," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 841-879.
    6. Klemperer, Paul D, 1987. "Entry Deterrence in Markets with Consumer Switching Costs," Economic Journal, Royal Economic Society, vol. 97(388a), pages 99-117, Supplemen.
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    Cited by:

    1. Jean-Bernard Chatelain, 2010. "The Profit-Investment-Unemployment Nexus And Capacity Utilization In A Stock-Flow Consistent Model," Metroeconomica, Wiley Blackwell, vol. 61(3), pages 454-472, July.
    2. Chatelain, Jean-Bernard & Ralf, Kirsten & Amable, Bruno, 2010. "Patents as Collateral," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 1094-1104.

    More about this item

    Keywords

    capital; pricing; capital market imperfections;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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