| Chapter one provides the reader an introduction to the thesis. Some basic background information on the theory of capital structure is presented. Finally the reader is appraised of where the thesis will go and how it will fit into the theory of capital structure.; Chapter two investigates the properties of various legal regimes when there is the opportunity for bankruptcy. The key result is that strict liability always yields less than the socially optimal level of care, while negligence will never do any worse than strict liability. The paper characterizes the behavior of the firm in terms of the possible values the liability may take. The chapter investigates both the case of a single tortfeasor and joint tortfeasors. The joint tort regimes were ranked based on which regime induced the optimal level of care from the tortfeasors. The advantage of the paper over previous papers is that it conditions the rankings on the level of liability and not the solvency of the firm, which is endogenized in this chapter.; Chapter three provides a theory of regulatory finance that accounts for the full cost of capital. Regulated firms have their prices and capital structure set by the regulator. The price allowed is a transfer from consumers to the firm and is increasing in the bargaining power of the firm, costs and uncertainty, while the debt equity ratio is increasing the firm's bargaining power and decreasing in costs and uncertainty. States in which the firms have large bargaining power will also slower in moving towards deregulation.; The model provides a framework for estimating the bargaining power of consumers. These estimates can be used to make various inferences about the states' regulatory policies. In addition, these measures can explain the pace of deregulation in the electricity industry. |
