Value Added as the Tax Base for Enterprise Income

The paper addresses the long standing asymmetry in the tax treatment of debt and equity costs through a direct comparison of two hypothetical regimes based exclusively on income taxation, broadly defined, and value added taxation. The model presented widens existing debate to encompass the choice between entrepreneurial and contractual use of inputs generally and including labour, as well as capital. Using representative functional forms and numerical illustrations the analysis explores the effect of the tax regimes on firm decisions concerning input selection, output level and vertical integration. The greater neutrality of value added taxation is shown to produce gains in terms of firm efficiency in production and concentration on competitive advantage

On the Behavior of Entrepreneurial Factor Supply to the Firm

This paper draws on an existing, but little used, approach to the choices governing the supply of ‘entrepreneurial’, in the sense of ‘residually remunerated’, resources to an enterprise, especially post start up. It focuses in particular on the hybrid ‘own factor demand/supply curve’ to the firm of Bronfenbrenner (1960), but attempts to treat such supply in conjunction with ‘contractual’ employment of resources, thus making use of gearing and portfolio concepts. To achieve this, it is found necessary for the hybrid schedule to be reinterpreted and recast as the locus of the relevant utility maximising choices. A model is presented which features combining all productive resources in a single factor F so as to concentrate on the choice between the entrepreneurial and contractual employment of these. The model identifies a variety of possible entrepreneurial resource supply responses to product market signals, including the possibility of divergence from the ‘normal’ expectation of a monotonically upward sloping supply curve. Such ‘unexpected’ behaviour is seen as rational and consistent, both with the needs of survival in distress and of safeguarding gains in the upside. Hence it is also efficient on welfare grounds. Analogies with the backward bending labour supply model and with risk/return choices in finance are pursued. The policy implication is that greater use of equity, especially in start ups and distress situations, should be encouraged

Is there such a thing as a safe bet ?

This paper is an attempt to set out a betting strategy appropriate to events with several possible final outcomes which are a) unambiguously defined and b) likely to show fluctuations in the respective probabilities as the event unfolds. It is then shown that, by placing bets of appropriate magnitude and at appropriate times, such as to take advantage of changing odds, it is possible to secure a certain profit, generally in advance of the outcome becoming known, and irrespective of which of the possible outcomes finally materialises. Furthermore, the bettor should enjoy the reassurance of an improving Net Expected Value (NEV), as the event progresses.The procedure, which may be viewed as a multiple hedging one, is suited to in running betting on individual match events, as well as on protracted seasonal events (such as a league championship in football or other sport). The principal requirement is that there be a reasonable expectation of a large amount of alternation in the relative prospects of at least two contenders. The procedure is outlined in general terms and illustrated with reference to real life football matches and league competitions from the 2015/6 season. It is seen to be profitable under the specified conditions. Apparent advantages in betting on draws and on favourites are discussed.

When is a multiple bet better than a single ?

The paper addresses an apparent paradox observed in betting on football scores, drawing on 20-year data from the English 2nd tier division (Championship). While accumulator bets have a lower Net Expected Value than single bets, ‘cross double’ bets on the scores, placed over successive playing rounds, produce distinctly better results and indeed a positive return overall. It is argued that this effect rests on the essential stability of the score frequencies across playing seasons and on the bookmakers’ failure, in setting the odds, to allow for occasional and temporary deviations from long run average frequencies. A betting strategy based on overdue scores occurring with compensating frequencies, and possibly clustered together, can then produce positive returns. Neglect of overdue scores can be expressed formally as a bias augmenting the probability of these and turning the odds in the bettor’s favour. It is shown that, while normally the bettor’s disadvantage is compounded in multiple bets, a compounded advantage results once the odds become better than fair. The paper also discusses certain quasi binomial characteristics of the betting involved and explores possible ways of hedging such bets ‘in running’.