A statistical model of the firm

Belal Ehsan Baaquie

Physica A: Statistical Mechanics and its Applications, 2019, vol. 524, issue C, 392-411

Abstract: A model of the firm is proposed that considers the firm to be a stochastic and random entity described by an action functional and the Feynman path integral. The action functional is postulated based on the profit maximization principle. The Cobb–Douglas production function and the Solow–Swan model for capital input are employed to define a specific model for the firm’s action functional. An option is defined on the profit of a firm in the framework of the statistical model. The option’s price can be studied empirically. A profit and loss sharing system of wages is defined as an extension of fixed wages.

Keywords: Firm; Profit maximization; Statistical model; Path integral; Profit-sharing wages (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:524:y:2019:i:c:p:392-411

DOI: 10.1016/j.physa.2019.04.069

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