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The Economics of Business ValuationTowards a Value Functional Approach$
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Patrick Anderson

Print publication date: 2013

Print ISBN-13: 9780804758307

Published to Stanford Scholarship Online: September 2013

DOI: 10.11126/stanford/9780804758307.001.0001

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Modern Value Quandaries

Modern Value Quandaries

(p.2) (p.3) 1 Modern Value Quandaries
The Economics of Business Valuation

Patrick L. Anderson

Stanford University Press

The author traces the importance of the business, company, or firm in Economics, society, and world history over two millennia. The author notes that, given its importance and centrality in modern economies, there should be a well-developed theory of the firm that pervades both Economics and Finance. However, a series of “quandaries” are posed that illustrate that this is not the case. These include the fact that neoclassical economics essentially ignores the firm, that mainstream Economics largely ignores the entrepreneur, and that real entrepreneurs do not maximize profits. Furthermore, much of Finance focuses on publicly-traded firms, while 99% of firms are privately held, and mathematical finance often assumes complete markets, which are a rarity in the actual world. These provocative statements motivate much of the theory and applications developed in the rest of the book.

Keywords:   net present value rule, value, neoclassical economics, Gilder, George, Shumpeter, Joseph, quandaries, Anderson, Patrick

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