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http://hdl.handle.net/10016/2794
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| Title: | Q investment models, factor complementary and monopolistic competition |
| Author(s): | Licandro, Omar |
| Publisher: | Universidad Carlos III de Madrid. Departamento de Economía |
| Issued date: | Feb-1991 |
| URI: | http://hdl.handle.net/10016/2794 |
| Abstract: | The observed fact that firms invest even if capacities are not fully employed does not fit well into most standard formalizations of optimal firm behavior. In this paper, the q investment approach is adapted to an imperfectly competitive economy where the representative firm is assumed to face demand uncertainty. Nominal rigidities and short-run factor complementarity are imposed as sufficient conditions to allow for the coexistence of investment and excess capacity. Since capacities are underemployed, marginal q is shown to diverge from average q. Finally, excess capacity subsists at steady state which makes it more than a shortrun phenomenon |
| Serie / Nº.: | Working Papers
1991-10 |
| Keywords: | Tobin's q
Investment
Monopolistic Competition
Quantity Rationing Model |
| Appears in Collections: | Economists Online
DE - Working Papers. Economics. WE
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