Uncertainty in the Austrian Theory of Capital
This paper is based on the traditional Austrian Theory of Capital which deals with expected values of future returns of investments over various periods of time. The longer the time period that elapses between the beginning of a production process and its end, the higher the (expected) productivity must be due to positive time preferences of individuals. This paper focuses on the uncertainty of future returns and on uncertainty preferences, instead. Based on the Hayekian idea of the dispersion of knowledge in society, it will be shown that there is a systematic relationship between the structure of capital and uncertainty. This result will be derived for a production process characterized by complete vertical integration and one which is not completely vertically integrated. The distinction between these two settings is crucial, if one accepts the distinction between an individual and a social period of production and the planning horizon which are introduced in this paper.
|Date of creation:||04 Nov 2002|
|Date of revision:|
|Note:||Type of Document - pdf; prepared on wordfile on mac; pages: 37; figures: none. Submitted to Review of Austrian Economics|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicolai Foss & Kirsten Foss & Peter G. Klein & Sandra K. Klein, .
"Heterogeneous Capital, Entrepreneurship, and Economic Organization,"
IVS/CBS Working Papers
2002-02, Department of Industrial Economics and Strategy, Copenhagen Business School.
- Foss Kirsten & Foss Nicolai & Klein Peter G. & Klein Sandra K., 2002. "Heterogeneous Capital, Entrepreneurship, and Economic Organization," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 12(1), pages 1-20, March.
- Kirsten Foss & Nicolai J. Foss & Peter G. Klein & Sandra K. Klein, 2002. "Heterogeneous Capital, Entrepreneurship, and Economic Organization," DRUID Working Papers 02-01, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Lewin, Peter, 1997. "Rothbard and Mises on Interest: An Exercise in Theoretical Purity," Journal of the History of Economic Thought, Cambridge University Press, vol. 19(01), pages 141-159, March.
- Morishima,Michio, 1992. "Capital and Credit," Cambridge Books, Cambridge University Press, number 9780521418409, june. pag.
- Dow, James & Werlang, Sergio Ribeiro da Costa, 1992. "Uncertainty Aversion, Risk Aversion, and the Optimal Choice of Portfolio," Econometrica, Econometric Society, vol. 60(1), pages 197-204, January.
- Hoppe, Hans-Hermann, 1997. "On Certainty and Uncertainty, or: How Rational Can Our Expectations Be?," The Review of Austrian Economics, Springer, vol. 10(1), pages 49-78.
- Epstein, Larry G & Wang, Tan, 1994. "Intertemporal Asset Pricing Under Knightian Uncertainty," Econometrica, Econometric Society, vol. 62(2), pages 283-322, March.
- Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpmh:0211001. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.