This paper considers the implications of alternative managerial incentive function for reducing costs in different market structures. An incentive function relates the income received by managers to the profits attained by the firm. Managers may choose the amount of effort they devote to cost...

This paper characterizes precisely the optimal capital policy for a firm facing a non-price rationing constraint in the market for investment funds. With this particular capital market imperfection firms may generally 'overinvest' relative to a perfect market case, rather than underinvest as...