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Investment, Sales Constraints and Profitability in France, 1957-1985

Author

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  • Henri SNEESSENS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

  • Bénédicte MAILLARD

    (Faculté Libre des Sciences économiques de Lille)

Abstract

This paper is devoted to the analysis of the investment behavior of the firm in the context of a quantity rationing (or disequilibrium) model with monopolistic competition on the goods market. Investment is entirely profit-driven as in the q-theory of investment. The profit variable is however decomposed into three components: the markup rate on variable costs, the capacity utilization rate and the discrepancy between the optimal and the actual-labor ratios. The model has the same long run implication as an accelerator model if and only if the optimal capacity utilization rate is constant in the long run. The suggested quantity rationing model is estimated on French data, over the period 1956-1985. The emphasis is on the investment equation. The parameter estimates are shown to have remained fairly stable over time.

Suggested Citation

  • Henri SNEESSENS & Bénédicte MAILLARD, 1988. "Investment, Sales Constraints and Profitability in France, 1957-1985," Discussion Papers (REL - Recherches Economiques de Louvain) 1988022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:1988022
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    Cited by:

    1. Riadh Ben Jelili, 2001. "Investment, Markup and Capacity Utilization in Tunisia," Working Papers 0132, Economic Research Forum, revised 10 Nov 2001.
    2. Meyer, H. & Anglès d'Auriac, J.C. & Maillard, J-M. & Rollet, G., 1994. "Phase diagram of a six-state chiral Potts model," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 209(1), pages 223-236.

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