Pricing and Investment

Stephen L. Gruneberg and Graham J. Ive
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Stephen L. Gruneberg: University College London
Graham J. Ive: University College London

Chapter 9 in The Economics of the Modern Construction Firm, 2000, pp 201-226 from Palgrave Macmillan

Abstract: Abstract In this chapter we model the pricing and investment decisions of firms, using the Eichner — Wood model (Eichner, 1980; Wood, 1975). This model will bring together the concepts of pricing, output, finance, profit margins, and gross operating profits, but it is the inclusion of growth which introduces a dynamic element, allowing for change and uncertainty. We shall use the Eichner model to demonstrate the tradeoff between the need for internal funding for investment and the constraint of the market on a firm’s ability to raise these funds by increasing its pricing mark-up. We adopt Wood’s approach to determining the maximum rate of sales growth and profit margin and suggest that this model can be applied to firms working in the construction industry.

Keywords: Investment Strategy; Total Revenue; Sales Growth; Production Period; Sales Revenue (search for similar items in EconPapers)
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-51043-2_9

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DOI: 10.1057/9780230510432_9

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