Investment coordination and demand complementarities
AbstractThis paper establishes necessary conditions for demand complementarity to imply investment coordination failure and explores the welfare implications of coordinated investment. Our main results caution against demand complementarities as a motive for investment coordination. We find that: 1) generally, a strict notion of complementarity (Hicks) is necessary for the existence of an investment coordination problem and 2) that when the problem does exist, coordination lowers social welfare without countervailing sectoral asymmetries.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 13 (1999)
Issue (Month): 2 ()
Note: Received: June 19, 1996; revised version: December 5, 1997
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Other versions of this item:
- Jean-Marie Baland & Patrick Fracois, 1996. "Investment Coordination and Demand Complementarities," Working Papers 933, Queen's University, Department of Economics.
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
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- Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
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