Abstract
A usual version of pure capital rationing problems with consistent optima is recalled in Sec. 1. Sec. 2 criticizes some known results and clarifies the assumptions hidden there; their proofs are made quicker in Sec. 4. By means of a very general theorem of the alternative for linear systems (see Sec. 7), three theorems in Sec. 3 put forward necessary and sufficient conditions for the existence of consistent optima, according to the various assumptions on the discounting factors. Sec. 5 points out that such an optimum leads to a vicious circle in fixing the budgets and looks like a machine which doubles their financial value. Sec. 6 shows that these worrying results come from an improper fitting of a well-known application of linear programming in activity analysis. These conclusions claim for non-pure capital rationing problems, i.e. with borrowing and lending opportunities.
Research projects Cariplo and Murst.
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© 1994 Physica-Verlag Heidelberg
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De Giuli, M.E., Magnani, U. (1994). Pure Capital Rationing Problems: How to Bury Them and Why. In: Peccati, L., Virén, M. (eds) Financial Modelling. Contributions to Management Science. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-86706-4_14
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