Thomas Edison's achievements as an inventor-entrepreneur tend to overshadow the fact that his knowledge and interests extended well beyond the applied sciences. In 1891, a crucial and busy year of his life, Edison took time to set forth his views on one of the most important issues of the day, government regulation of business. Edison's notebook remained almost untouched for nearly one hundred years until Professor Rubin began a careful examination of its contents. His editing and annotation of the manuscript reveal the considerable depth of Edison's intellect and his capacity to probe economic issues in the same thorough manner with which he approached research problems in the laboratory.

Master craftsmen played a critical role in launching the Industrial Revolution in America. In this case study of artisan entrepreneurship, Professor Kornblith analyzes the career of Jonas Chickering (1798–1853), the foremost American piano manufacturer before the emergence of the Steinways. By revolutionizing the way in which pianos were made, Chickering—with the help of others—turned a modest craft operation into a major industrial enterprise. Yet, Kornblith contends, he remained true to the craftsman's goal of artistic excellence and won the respect of his employees as well as of the public at large. By the force of his example, Chickering contributed to the acceptance of technological change within the trade and, more broadly, to the legitimation of industrial capitalism within American culture.

In this note, a loss shared by the security holders of merging firms is pointed out: separate corporate entities provide double protection against future negative cash flows that are partof any production process (e.g., when customer or employee liabilities exceed future income), independent of whether or not debt is used in the corporate capital structure. A merger involvesa relinquishment of this double protection in return for a less valuable single protection: limited liability in the merged corporation against combined negative cash flows.

This paper treats a problem of stochastic cash management under an average compensating-balance requirement. It develops a dynamic programming formulation of the problem in which the relevant state is a unidimensional quantity equivalent to the forecasted average balance at the end of the averaging period. Under usably broad conditions, it establishes the optimality of a transient policy of simple type, similar to the two-sided inventory type policy familiar from certain earlier studies of stationary cash balance problems having absolute balance requirements. The results apply to cases in which the transactions costs contain both fixed and proportional components. The paper discusses also a numerical example drawn from the literature of the cash balance problem and shows by simulation of the optimal (and simply modified forms of the optimal) policy, that good protection is afforded against negative balances, even though the model does not explicitly constrain the negative-balance probabilities.

The quadratic form of the covariance-co-skewness model by Kraus and Litzenberger and arbitrage pricing theory are used for an empirical investigation of market equilibrium with skewed seecurity returns. Empirical tests similar to the ones in Black-Jensen-Scholes and Gibbons are discussed. The empirical estimates give some support to the Kraus-Litzenberger hypothesis on skewness preference. However, there is some evidence that the tested arbitrage equilibrium is not a complete description of security pricing.

A necessary and sufficient condition for linear sharing rules to be Pareto optimal, as generally accepted by the finance community, is that utility functions be of the equicautious HARA class. We demonstrate that this condition is not necessary for a fixed distribution of initial endowments and derive the necessary and sufficient condition. We show examples of utility functions satisfying our conditions.