Analysis of the equity premium puzzle has focused on private--sector capital markets. However, the existence of an anomalous equity premium raises important issues in the evaluation of public--sector investment projects. These issues are explored below. We begin by formalizing the argument that...

A state-contingent model of production under uncertainty is developed and compared with more traditional models of production under uncertainty. Producer behavior with both production and price risk, in the presence and in the absence of futures and forward markets, is analyzed in this...