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Unbundling, Take Two: No Effect on Risk

Fortnightly Magazine - January 1 1998

been associated with generation assets and not distribution (or any of the other problems Rosenberg points to). Generation assets are relatively more risky than distribution assets.

The error made by Rosenberg is all too common; it is seductively and yet falsely intuitive. Possibly this is the reason that the Nobel Prize in Economics has been awarded to several financial economists whose contributions have helped dispel this notion. We should not overlook the last 50 years of scientific inquiry by financial economists that has given us a clear understanding of the relation between financial markets and operation of the firm.

Michael T. Maloney

Professor of Economics

Clemson University

Clemson, S.C.

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