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  2. Trade-off theory of capital structure - Wikipedia

    en.wikipedia.org/wiki/Trade-Off_Theory_of...

    This theory is often set up as a competitor theory to the pecking order theory of capital structure. [2] A review of the trade-off theory and its supporting evidence is provided by Ai, Frank, and Sanati. [3] An important purpose of the theory is to explain the fact that corporations usually are financed partly with debt and partly with equity.

  3. Williamson tradeoff model - Wikipedia

    en.wikipedia.org/wiki/Williamson_tradeoff_model

    The Williamson tradeoff model is a theoretical model in the economics of industrial organization which emphasizes the tradeoff associated with horizontal mergers between gains resulting from lower costs of production and the losses associated with higher prices due to greater degree of monopoly power.

  4. Trade-off - Wikipedia

    en.wikipedia.org/wiki/Trade-off

    In economics a trade-off is expressed in terms of the opportunity cost of a particular choice, which is the loss of the most preferred alternative given up. [2] A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service, or experience, rather than others that could be made or obtained using the same required resources.

  5. Tax policy - Wikipedia

    en.wikipedia.org/wiki/Tax_policy

    An equity-efficiency tradeoff appears when there is some kind of conflict between maximizing the equity and maximizing economic efficiency. The trade-off between equity and efficiency is at the heart of many discussions of tax policy. Two questions are debated. First, there is disagreement about the nature of the trade-off .

  6. Economic efficiency - Wikipedia

    en.wikipedia.org/wiki/Economic_efficiency

    When drawing diagrams for businesses, allocative efficiency is satisfied if output is produced at the point where marginal cost is equal to average revenue. This is the case for the long-run equilibrium of perfect competition. Productive efficiency occurs when units of goods are being supplied at the lowest possible average total cost.

  7. Optimal tax - Wikipedia

    en.wikipedia.org/wiki/Optimal_tax

    Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that maximises a social welfare function subject to economic constraints. [1] The social welfare function used is typically a function of individuals' utilities , most commonly some form of utilitarian function, so the tax system is chosen to ...

  8. Financial economics - Wikipedia

    en.wikipedia.org/wiki/Financial_economics

    Related to these are various of the economic puzzles, concerning phenomena similarly contradicting the theory. The equity premium puzzle, as one example, arises in that the difference between the observed returns on stocks as compared to government bonds is consistently higher than the risk premium rational equity investors should demand, an ...

  9. Theory of the firm - Wikipedia

    en.wikipedia.org/wiki/Theory_of_the_firm

    Such a situation runs counter to neo-classical economic theory. The neo-classical market is instantaneous, forbidding the development of extended agent-principal (employee-manager) relationships, planning, and of trust. Coase concludes that “a firm is likely therefore to emerge in those cases where a very short-term contract would be ...

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