Business Formation and Aggregate Investment

Item Type Journal paper

The paper proposes an intertemporal equilibrium model of vintage capital and monopolistic competition. Reflecting a tradeoff between the number and capacity of new machines, investment may be extensive or intensive. External gains from specialization and rationalization result in distorted investment decisions. The paper compares the effectiveness of a general investment tax credit with a start-up subsidy that shifts the direction of investment towards a more extensive form. An optimal policy of investment promotion is derived.

Authors Keuschnigg, Christian
Journal or Publication Title German Economic Review
Language English
Keywords Capital, competition, equilibrium, monopolies, econometric models.
Subjects other research area
HSG Classification not classified
Refereed No
Date 1 February 2001
Publisher Blackwell
Place of Publication Oxford
Volume 2
Number 1
Page Range 31-55
Number of Pages 25
ISSN 1465-6485
ISSN-Digital 1468-0475
Depositing User Prof. Dr. Christian Keuschnigg
Date Deposited 11 Jan 2006 14:26
Last Modified 23 Aug 2016 10:59


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Keuschnigg, Christian (2001) Business Formation and Aggregate Investment. German Economic Review, 2 (1). 31-55. ISSN 1465-6485

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