This volume is the final result of the research project ''Micro growth model", that was sponsored by the Central Research Pool of Tilburg University, the Netherlands. Apart from the University Council for this important financial support, I owe Prof. Dr. Fiet Verheyen very much for the way in which he introduced me into scientific circles and for the way in which he supervised and stimulated my work. Dr. Jan de Jong and Peter Janssen C. E. , Technical University of Eindhoven, piloted me safely through the mathe matics of optimal control theory and removed some technical barriers. Their help was indispensable for the success of this project. I would also like to mention the kind support of Prof. Dr. Jack Kleijnen, who gave me many valuable hints on how to present the results of this project. In this way I was able to contact with several resear chers inside and outside the Netherlands. Most grateful I am to Prof. Dr. Charles Tapiero, Jerusalem University, who commented on important parts of this book in a constructive way and who suggested many subjects for further research. Also Mr. Geert Jan vsn Schijndel, Tilburg University, should be mentioned here, because he closely read the work and I appreciated his remarks and corrections very much. Many collea gues have contributed to the results of this research project in a direct or indirect way. Especially I should like to mention my contacts with Prof. Dr.

1. Introduction

1. Scope of the book
2. Outline of the book
3. Relevance of dynamic theories of the firm
4. Origins of dynamic theories of the firm
5. Nature of the theory of the firm and of this book
6. Summary
2. A Survey of Dynamic Theories of the Firm
1. Introduction
2. Shareholders
3. Management
4. Employees
5. Labour Market
6. Output Market
7. Competitors
8. Lenders of debt money
9. Suppliers of assets
10. Government
11. Macro economic data
12. Summary
3. Some Predecessors
1. Introduction
2. Investments and depreciation (Jorgenson)
3. Production and finance I (Leland)
4. Finance and the value of the firm (Ludwig)
5. Production and finance II (Lesourne & Leban)
6. Summary
4. A Dynamic Model of the Firm
1. Introduction
2. Production
3. Sales and operating income
4. Financing and government
5. Policy of the firm
6. The model
7. Further assumptions
8. Optimal solution
9. Summary
5. Optimal Trajectories of the Firm
1. Introduction
2. Basic trajectory
3. Depth investments
4. Consolidation
5. Depth investments and consolidation
6. Summary
6. A Further Analysis
1. Introduction
2. Optimal decision rules
3. Environmental influence on the trajectory of the firm
4. Influence of (sets of) environmental parameters
5. Summary
7. Conclusions
Appendix 1. An Interpretation of the Maximum Principle
1. Introduction
2. Technical terms
3. The Maximum Principle of Pontryagin
4. Mixed control constraints
5. State constraints
6. Summary
Appendix 2. Solutions of the Models of Chapter 3
1. Introduction
2. A general solution procedure
3. The model of Jorgenson
4. The model of Ludwig
5. The model of Lesourne & Leban
6. Summary
Appendix 3. Solution of the Model of Chapter 4
1. A reduced form of the model
2. Optimality conditions
3. A reduced form of the optimality conditions
4. Infeasible paths
5. Feasible paths
6. Final paths
7. Coupling conditions
8. Coupling procedure
9. Summary
List of Symbols
References
Author Index.