Numerous studies in recent years have emphasized the importance of accounting properly for abandoment value in capital budgeting (see [1], [4], [7], [10], and [11]). For a variety of reasons, a project need be neither physically exhausted nor have negative cash flows to be abandoned. Robichek and Van Home [10] suggested that a project should be abandoned in any period in which the present value of future cash flows does not exceed its abandonment value. In a modification of this rule, Dyl and Long [4] proposed that the firm give consideration to all possible future abandonment opportunities. They argued that abandonment need not occur at the earliest possible date that the abandonment condition is satisfied, but rather at the date that yields the highest NPV over all future abandonment possibilities. A generalization of these models was offered by Bonini [1], who developed a dynamic programming model to analyze investment projects with abandonment possibilities and uncertain cash flows. More recently, Gaumnitz and Emery [7] compared the abandonment decision to the like-for-like replacement decision and noted that the correct model for a particular case depends on the suitability of the assumptions.

Earlier work on aggregate production functions with capital-embodied technology showed that, when firms employ more than one capital type, conditions for partial capital ("equipment") aggregation and for total capital aggregation differ. This paper studies simultaneously existing partial and total aggregates. Existence of a total and one partial aggregate implies existence of the complementary partial aggregate. However, simultaneous existence requires each firm's production function to be strongly separable in its capital subaggregates. The use of subaggregates like "equipment" and "plant" together with an aggregate "capital" thus implies that "plant" and "equipment" are perfect substitutes and is highly questionable.

The purpose of this research is to explain municipalities' voluntary participation in the MFOA Certificate of Conformance Program (CCP) during 1976–1980 as a function of the economic incentives of municipal officials. Our operational model predicts that cities with more debt, CCP participation prior to 1976, professionally active municipal officials, and a manager form of government are more likely to participate. In addition, cities in states with GAAP (non-GAAP) reporting requirements were expected to be more (less) likely to participate. Taken as a whole, the empirical results are consistent with the proposed model of the CCP participation decision.

[This paper examines the effect of the capital gains tax on investors' optimal consumption and investment behavior and on equilibrium asset prices in an intertemporal economy. It explictly considers the fact that capital gains and losses on stock are taxed only when the investor sells the stock. Ownership of stock then confers upon the investor a timing option which enables him to realize capital losses immediately and defer capital gains. This option is a large fraction of the total benefit which accrues to the stockholder, and is the prime reason for the novel implications of capital gains taxation, discussed in this paper.]

This paper presents the necessary and sufficient conditions for determining the signs of the solution variables of a system of linear equations based only upon a knowledge of the signs of the coefficient matrix and the signs of the right hand side variables. This problem was initially formulated in economics due to the idea that the signs of an equation's derivatives might have a stronger empirical basis than that of a particular functional form. A new interest in qualitative problems has arisen in connection with the need to develop analytic measures in order to better manage the understanding and use of large, computer-based mathematical systems. The conditions for the qualitative determinancy of nonhomogeneous systems are developed in terms of a small number of necessary conditions which are jointly sufficient. Algorithmic approaches are given for testing a given system for qualitative determinancy. For nonhomogeneous systems algorithms are given for constructing all possible qualitatively determinate systems of a given size. For the homogeneous case conditions are also given for the qualitative invertibility of the (irreducible) coefficient matrix. These conditions are then related to the problem of partially qualitatively determinate systems and the signs in the qualitative inverse of a matrix.

[Under the assumption that demand behavior depends on intertemporal preferences as well as (point) expectations concerning future prices, it is demonstrated that under plausible conditions rationality imposes no observable restrictions on the demand function and expectations and preferences are observationally indistinguishable.]

Although accounting and control systems have increased in both their sophistication and importance as resource allocation decisions have moved more within organizations, resistance and system failure are both common, and there is little evidence that system sophistication is associated with effective performance. Three consonance hypotheses are advanced to explain resistance and system difficulty: accounting and control systems will be implemented easily to the extent that they are (a) consistent with other sources of power in their implications for the distribution of power; (b) consistent with the dominant organizational culture and paradigm in their implications for values and beliefs; and (c) consistent with shared judgments about technical certainty and goal congruence in their assumptions about the degree of certainty about the organization's goals and technology. These sources of resistance are fundamentally structural, and process-based strategies (such as user involvement in design) are largely ineffective in overcoming these problems. This result suggests that power structures and organizational paradigms must be considered in both research and practice dealing with accounting and control systems.

Price elasticities are estimated for telephone calls and minutes of conversation using data from a experiment in central Illinois conducted by General Telephone and Electronics. The experiment charges separately for calls and for minutes. Using a model that is consistent with the theory of telephone demand, the authors estimate the effects of both prices. The nonlinear generalized least squares estimates of the elasticities are fairly small-about 0.1 or less in absolute value at experimental price levels-but they are estimated with high precision. The report briefly considers the application of these results to predict the effects of introducing measured service telephone rates in other cities. RESIDENTIAL TELEPHONE SUBSCRIBERS in the United States typically pay a flat monthly rate for with no extra charge for calls within the area. The alternative of explicitly charging for calls, commonly referred to as usage-sensitive pricing or local measured service, is of increasing interest to U.S. telephone companies and regulatory commissions (Cosgrove and Linhart [5]; Garfinkel and Linhart [8]; Baude, ed. [2]).3 Charging for calls that are now free clearly holds promise of increasing economic efficiency (Alleman [1]; Mitch