Austrian Economics, Market Process, and the EVA(R) Framework

Cachanosky, Nicolas

Austrian Economics, Market Process, and the EVA(R) Framework

Prepared for the Free Market Institute’s symposium on Austrian Perspectives on Business Valuation for the Journal of Business Valuation and Economic Loss Analysis, 2016

23 Pages Posted: 23 Jun 2016 Last revised: 15 Jun 2018

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

The University of Texas at El Paso; American Institute for Economic Research; UCEMA Friedman-Hayek Center for the Study of a Free Society

Date Written: June 20, 2016

Abstract

In this paper I present a financial framework, known as Economic Value Added or EVA®, used to value firms and apply it to topics highlighted in the Austrian literature. In particular I contrast the market process emphasize in the Austrian literature with the neoclassical firm profit maximization and the role of Kirzner’s entrepreneurial alertness. Then I show how these micro topics can be aggregated into macro issues such as the Cantillon Effect, an aggregate average period of production, and the impact of country risk into value creation.

Keywords: Austrian Economics, Market Process, EVA(R), Economic Value Added, Entrepreneurial Alertness, Microfoundations

Suggested Citation: Suggested Citation

Cachanosky, Nicolas, Austrian Economics, Market Process, and the EVA(R) Framework (June 20, 2016). Prepared for the Free Market Institute’s symposium on Austrian Perspectives on Business Valuation for the Journal of Business Valuation and Economic Loss Analysis, 2016, Available at SSRN: https://ssrn.com/abstract=2799501