The net-present-value rule is a pillar of modern finance theory. As known, it is a capital budgeting rule. Finance theory prescribes the investor to compare the opportunity in hand with an asset of equivalent risk, i.e. to discount cash flows with a risk-adjusted rate of Genuine Uggs Uk
return. This paper aims at showing that inconsistencies and antinomies arise when applying the above-mentioned rule. Further, it turns out that it is actually impossible to compare alternatives equivalent in risk and any decision Replica Ugg Boots China
maker cannot prevent herself to violate the above tenet.
Public utilities are generally subject to a carrier of last resort (COLR) obligation which in part requires that they stand by with capacity in place to serve consumers on demand, including consumers of the competitive fringe. We find that a partial COLR obligation is optimal when the competitive fringe chooses its reliability strategically. Moreover, the regulator employs the COLR obligation not only as a back-up source of supply for fringe consumers but as a policy instrument to induce the competitive fringe to supply the first-best level of reliability.