Uncertainty and Tobin’s Q in a Monopolistic Competition Framework
AbstractThis paper combines the adjustment costs hypothesis of Tobin’s q models with Malinvaud’s proposition that, irreversibility and uncertainty matter in explaining investment. Demand uncertainty and irreversibility allow for excess capacity and lead firms to look at the expected 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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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1990003.
Date of creation: 01 Jan 1990
Date of revision:
uncertainty; competition; demand; investment policy;
Other versions of this item:
- Licandro, Omar, . "Uncertainty and Tobin´s q in a monopolistic competition framework," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/2769, Universidad Carlos III de Madrid.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philippe MICHEL, 1986. "Dynamique de l'accumulation de capital en présence de contraintes de débouchés," Annales d'Economie et de Statistique, ENSAE, issue 2, pages 117-145.
- Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
- Portes, Richard, 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition: By H.R. Sneessens," European Economic Review, Elsevier, vol. 31(3), pages 812-815, April.
- Schiantarelli, F. & Georgoutsos, D., 1990. "Monopolistic competition and the Q theory of investment," European Economic Review, Elsevier, vol. 34(5), pages 1061-1078, July.
- Sneessens, Henri R., 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition," European Economic Review, Elsevier, vol. 31(3), pages 781-808, April.
- Lambert, J.-P. & Mulkay, B., 1987. "Investment in a disequilibrium context or does profitability really matter ?," CORE Discussion Papers 1987003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Benassy, Jean-Pascal, 1991. "Monopolistic competition," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 37, pages 1997-2045 Elsevier.
- Malinvaud, E., 1987. "Investment and the inflation-unemployment tradeoff in a macroeconomic rationing model with monopolistic competition: By H.R. Sneessens," European Economic Review, Elsevier, vol. 31(3), pages 808-811, April.
- Dreze, Jacques & Bean, Charles R, 1990. " European Unemployment: Lessons from a Multicountry Econometric Study," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(2), pages 135-65.
- Licandro, Omar, .
"Q investment models, factor complementary and monopolistic competition,"
Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/2794, Universidad Carlos III de Madrid.
- Omar LICANDRO, 1992. "Q Investment Models, Factor Complementarity and Monopolistic Competition," Discussion Papers (REL - Recherches Economiques de Louvain) 1992014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Rama, Martin, 1990. "Empirical investment equations in developing countries," Policy Research Working Paper Series 563, The World Bank.
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