TheRANDCorporationTheoryofRationalOptionPricingAuthor(s):RobertC.MertonSource:TheBellJournalofEconomicsandManagementScience,Vol.4,No.1(Spring,1973),pp.141-183Publishedby:TheRANDCorporationStableURL:http://www.jstor.org/stable/3003143Accessed:26/02/200921:09YouruseoftheJSTORarchiveindicatesyouracceptanceofJSTOR'sTermsandConditionsofUse,availableathttp://www.jstor.org/page/info/about/policies/terms.jsp.JSTOR'sTermsandConditionsofUseprovides,inpart,thatunlessyouhaveobtainedpriorpermission,youmaynotdownloadanentireissueofajournalormultiplecopiesofarticles,andyoumayusecontentintheJSTORarchiveonlyforyourpersonal,non-commercialuse.Pleasecontactthepublisherregardinganyfurtheruseofthiswork.Publishercontactinformationmaybeobtainedathttp://www.jstor.org/action/showPublisher?publisherCode=rand.EachcopyofanypartofaJSTORtransmissionmustcontainthesamecopyrightnoticethatappearsonthescreenorprintedpageofsuchtransmission.JSTORisanot-for-profitorganizationfoundedin1995tobuildtrusteddigitalarchivesforscholarship.Weworkwiththescholarlycommunitytopreservetheirworkandthematerialstheyrelyupon,andtobuildacommonresearchplatformthatpromotesthediscoveryanduseoftheseresources.FormoreinformationaboutJSTOR,pleasecontactsupport@jstor.org.TheRANDCorporationiscollaboratingwithJSTORtodigitize,preserveandextendaccesstoTheBellJournalofEconomicsandManagementScience.http://www.jstor.org ArticleContents p.141 p.142 p.143 p.144 p.145 p.146 p.147 p.148 p.149 p.150 p.151 p.152 p.153 p.154 p.155 p.156 p.157 p.158 p.159 p.160 p.161 p.162 p.163 p.164 p.165 p.166 p.167 p.168 p.169 p.170 p.171 p.172 p.173 p.174 p.175 p.176 p.177 p.178 p.179 p.180 p.181 p.182 p.183 IssueTableofContents TheBellJournalofEconomicsandManagementScience,Vol.4,No.1(Spring,1973),pp.1-365 FrontMatter[pp.1-1] TheEconomicsofProductSafety[pp.3-28] AnEconometricPlanningModelforAmericanTelephoneandTelegraphCompany[pp.29-56] TheBehaviorofaFirmSubjecttoStochasticRegulatoryReview[pp.57-88] TheTelephoneSystemasaPublicGood:StaticandDynamicAspects[pp.89-100] ADecisionAnalysiswithMultipleObjectives:TheMexicoCityAirport[pp.101-117] PricingDecisionsofRegulatedFirms:ABehavioralApproach[pp.118-140] TheoryofRationalOptionPricing[pp.141-183] PredictingRailroadBankruptciesinAmerica[pp.184-211] RelativePricesonRegulatedTransactionsoftheNaturalGasPipelines[pp.212-234] MarketStructure,QualityandDurability[pp.235-248] ShortArticles,CommentsandReviews TheMartinReportandItsAftermath[pp.250-269] ADynamicModeloftheRegulatedFirmwithaPriceAdjustmentMechanism[pp.270-282] ResourceAllocationandtheRegulatedFirm:Comment[pp.283-287] ResourceAllocationandtheRegulatedFirm:CommentontheComments[pp.288-292] TheProfit-PerformanceEffectsoftheSeparationofOwnershipfromControlinLargeU.S.IndustrialCorporations[pp.293-303] ASimpleModelofFirmBehaviorunderRegulationandUncertainty[pp.304-315] PricingofPollution:TheCoaseTheoremintheLongRun[pp.316-319] PricingofPollution:Reply[pp.320-321] RegulatedUtilitiesandEquipmentManufacturers'ConspiraciesintheElectricalPowerIndustry[pp.322-337] DepreciationinaSimpleRegulatoryModel[pp.338-342] Televeision'sSecondChance:ARetrospectiveLookattheSloanCableCommission[pp.343-365] BackMatter[p.249]