Managerial economics and operating beta
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Thomas J. O'Brien
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Article
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2011
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John Wiley and Sons
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English
โ 201 KB
We model a firm's unlevered beta in terms of elementary microeconomic variables. The source of uncertainty is a shock to demand. A firm decides on capital before the shock, and on labor, output, and price after the shock. Some insights are: (1) with decreasing returns to scale of production, beta ha