Topic
Profit (economics)
About: Profit (economics) is a research topic. Over the lifetime, 10844 publications have been published within this topic receiving 183904 citations. The topic is also known as: profitability & accounting profit.
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Book•
01 Jan 1921
TL;DR: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets as mentioned in this paper.
Abstract: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets. To explain this seeming paradox, Knight uncovers the distinction between calculable risk and essentially unknowable uncertainty. Knight argued that risk stems from repeated events, which therefore allow probabilities to be calculated and factored into decisions, as for instance insurers do. Uncertainty however, stems from events that are unpredictable and as such cannot be prepared against. According to Knight, it is the interplay between risk and uncertainty on the one hand and competition between incumbent and new entrepreneurs that accounts for the enormous variation in profitability across firms and, for the same firms, over time. His insights on the sources of profit have been instrumental in shaping modern economic theory and to the development of a useful understanding of probability. This New Edition has been typeset with modern techniques and contains a newly compiled Index of important topics. It has been painstakingly proofread to ensure that it is free from errors and that the content is faithful to the original.
10,309 citations
Posted Content•
TL;DR: In this paper, the authors quantified the effect of prior exporting experience on the decisions of Colombian manufacturing plants to participate in foreign markets and developed a dynamic discrete-choice model of exporting behavior that separates the roles of profit heterogeneity and sunk entry costs in explaining plants' exporting status.
Abstract: Recent theoretical models of entry predict that, in the presence of sunk costs, current market participation is affected by prior experience This paper quantifies the effect of prior exporting experience on the decisions of Colombian manufacturing plants to participate in foreign markets It develops a dynamic discrete-choice model of exporting behavior that separates the roles of profit heterogeneity and sunk entry costs in explaining plants' exporting status Sunk costs are found to be significant and prior export experience is shown to increase the probability of exporting by as much as sixty percentage points Copyright 1997 by American Economic Association
1,990 citations
TL;DR: The free-rider effects would seem to choke off the free-riders in organizations of any significant size as mentioned in this paper, which is why cooperation and profit sharing are often claimed to motivate workers by giving them a share of the pie.
Abstract: Partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie. But in organizations of any significant size, the free-rider effects would seem to choke off...
1,805 citations
TL;DR: Using a representative model from each paradigm, it is found that both sets of factors are significant determinants of firm performance and that organizational factors explain about twice as much variance in profit rates as economic factors.
Abstract: We decompose the inter-firm variance in profit rates into economic and organizational components. Using a representative model from each paradigm we find that both sets of factors are significant determinants of firm performance. Further findings are that the two effects are roughly independent and that organizational factors explain about twice as much variance in profit rates as economic factors.
1,382 citations
TL;DR: In this article, the authors proposed the concentration-profits hypothesis, and calculated accounting profit rates and concentration, and then applied it to the analysis of profit data from the United States.
Abstract: I. The concentration-profits hypothesis, 294. — II. Industry definition, measure of concentration, and selection of sample, 297. — III. Character and limitations of profit data, 305. — IV. Calculation of accounting profit rates, 310. — V. Association of industry profit rates and concentration, 311. — VI. Association of firm profit rates and industry concentration, 317. — VII. Association of profit rates with other determinants, 321. — VIII. Summary, 323.
1,374 citations