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Effect of fixed cost under uncertainty and access to the capital market
Author(s) -
Ghosh Dipak
Publication year - 1986
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090070311
Subject(s) - fixed capital , fixed cost , economics , microeconomics , capital (architecture) , cost of capital , monetary economics , industrial organization , capital formation , financial capital , profit (economics) , archaeology , history
The purpose of this paper is to demonstrate that for a firm operating under conditions of uncertainty, the negative relationship between fixed cost and output disappears if the firm has access to the capital market. Some practical implications of this result are also discussed.