Publication:
Uncertainty and Tobin´s q in a monopolistic competition framework

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URI: https://hdl.handle.net/10016/2769
ISSN: 2340-5031
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we9107.pdf (496.2 KB)
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1991-02
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This paper combines the adjustment cost hypothesis of Tobin's q models with Malinvaud's proposition that demand uncertainty matters in explaining investment. Demand uncertainty allows for ex-post excess capacity and leads firms to look at the expeeted excess capacity in deciding about investment. Marginal q is shown to be smaller than average q, the difference being explained by the degree of capacity utilization (DUC).
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Tobin's q, Investment, Monopolistic Competition, Quantity Rationing Model
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DE - Working Papers. Economics. WE
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