Abstract
Up to here, we have mainly been concerned with more or less technological features as represented in our model of the firm. In this chapter, we will discuss an important financial issue, viz. cost allocation, in the context of the corporate model as developed in the previous chapter. As noted there, we are considering a firm in which part of the activities can be labelled as ‘general services’ (abbreviated GS). The GS sector produces common goods, i.e. goods from which the firm as a whole benefits. This gives rise to common costs. They may be variable in the long run, but, in the short run, they are assumed to be entirely fixed. Because output of GS is not supplied to the outside market, the common costs must somehow be allocated.
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© 1987 Springer-Verlag Berlin Heidelberg
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Meijboom, B.R. (1987). The Model of the Firm: Cost Allocations and Organizational Structure. In: Planning in Decentralized Firms. Lecture Notes in Economics and Mathematical Systems, vol 289. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-48902-0_3
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DOI: https://doi.org/10.1007/978-3-642-48902-0_3
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-17795-1
Online ISBN: 978-3-642-48902-0
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