It appears that simple mathematical laws describing the profits-revenues behavior for a company can be conceived by treating energy in physics as being equivalent to money in economics. This mathematical analogy permits an extension of Planck’s law from physics to economics with a reinterpretation of the significance of the various mathematical symbols. A careful study of the readily available profits-revenues data for several companies (some specific examples cited are Facebook, Google, ExxonMobil, Best Buy) indicates that all there are three types of companies, called Type I, Type II and Type III. All the three types of behaviors are indeed observed in the real world. The large majority of companies follow the linear law y = hx + c, a few follow the power-law, and there are a few recorded examples of public companies that seem to operate in the region to the right of the maximum point of the power-exponential law. Such companies are generally headed towards bankruptcy.
Comments
Content
It appears that simple mathematical laws describing the profits-revenues behavior for a company can be conceived by treating energy in physics as being equivalent to money in economics. This mathematical analogy permits an extension of Planck’s law from physics to economics with a reinterpretation of the significance of the various mathematical symbols. A careful study of the readily available profits-revenues data for several companies (some specific examples cited are Facebook, Google, ExxonMobil, Best Buy) indicates that all there are three types of companies, called Type I, Type II and Type III. All the three types of behaviors are indeed observed in the real world. The large majority of companies follow the linear law y = hx + c, a few follow the power-law, and there are a few recorded examples of public companies that seem to operate in the region to the right of the maximum point of the power-exponential law. Such companies are generally headed towards bankruptcy.