This article presents a study on the regulation, implied revenue requirements, and methods of depreciation in accounting in the U.S. The choice between flow-through and normalization accounting procedures, assuming accelerated depreciation is used for taxes, is not clear. The theory of accounting, if it is assumed that straight line depreciation is correct, points to increasing the early depreciation expense with the use of accelerated depreciation for taxes compared with the amount of expense if straight-line depreciation is used for taxes. However, in practice the issue is complicated by the fact that straight-line depreciation may not be correct, thus, the adjustment may actually be causing more errors
M. L. Greenhut, M. J. Hwang, and H. Ohta have done an excellent job in pointing out the overly rigid assumptions of my model of motor carrier price discrimination (that is, constant elasticity of demand and perfect competition among shippers) and my incorrect interpretation of some of the results (that is, failing to recognize that the absolute difference between motor carrier rates and motor carriers costs increases with distance even though their ratio declines). Furthermore, they have developed a much more general model to explain why motor carrier discrimination varies with distance. If one assumes that elasticity of demand increases as the price of the good increases (a very logical assumption), then distant consumers will have more elastic demands and the difference between the profit maximizing motor carrier rate and motor carrier cost will decline. There are only two points in their paper with which I wish to disagree. In Figure 1, they show that under my assumptions the absolute difference between motor carrier rates and motor carrier costs increases with distance, thus making the difference between price of good and cost of producing and shipping it greater in distant than in near markets. This fact leads thenm to state later that . . . resale possibilities by nearer buyers militate against the use of this type of price discrimination. Resale of goods between two markets is profitable if the difference in price of the good between the two markets is greater than the additional shipping costs. Suppose there is a buyer at a short distance m from the original producer who is considering reselling to another buyer at a greater distance M, from the original producer. The distance between the two buyers is M-m. Assume that the motor carrier cost of shipping a good, K, is broken into its terminal and line-haul elements, Ko and m. Then the cost of hauling from the producer to the nearby buyer Km, can be expressed as:
Security market regulators, among others, are concerned to know whether or not dealers are natural monopolists. Based on a randomly drawn sample of 314 over-the-counter stocks, the results of this study suggest that while there are economies of scale, they are not on the dealer level. In addition, both systematic and unsystematic risk were tested for association with the transaction costs in this market. The evidence suggests unsystematic risk is related to spread
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Summary . The modern theory of finance suggests that most investors should put part or all of their money into a “market portfolio” mixed with borrowing or lending. Empirical evidence generally supports the theory, but there are some unanswered questions about the composition of the best market portfolio, about the apparent attractiveness of low risk stocks relative to high risk stocks, and about ways of minimizing transaction costs. Attempts to create a fund based on these principles and to make it available to a large number of investors have uncovered some important problems. Legal costs due to government regulation, the costs of managing a fund, and especially the costs of selling it are all much higher than one might expect. Despite these problems, efforts to create such funds seem destined for eventual success