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A Note on the Evaluation of the Marginal Efficiency of Capital

Sakari T. Jutila

Abstract

Applications of capital theory refer to a world of changing population, institutional processes, technology, and innovation. For example, an investment decision may be affected by some expected repetitive patterns of circumstances or by some seemingly irreversible processes threatened by obsolescences or stagnation. One may assume the principle of an eventually diminishing net returns flow. It seems desirable to treat the marginal efficiency of capital in terms of an initial investment and a net returns flow that varies with time. For a variety of such time dependent net returns flows the treatment of the marginal efficiency of capital is simplified by the Laplace transform technique illustrated in this article.