We develop a simple analytical framework where the longevity of profit-maximizing firms requires costly resources. We show that a firm's longevity and value are positively related to the firm''s pricing power, cash reserves, honesty, and ratio of equity to debt financing.

We develop a simple analytical framework where the longevity of profit-maximizing firms requires costly resources. We show that a firm's longevity and value are positively related to the firm''s pricing power, cash reserves, honesty, and ratio of equity to debt financing.