Governmental activity and private capital investment

We analyze within a dynamic model how firms decide on capital investment if the accompanying adjustment costs are a function of governmental activity. The government provides a public input and decides on the degree of rivalry. The productive public input enhances private capital productivity and reduces adjustment costs. We derive the equilibrium in which capital and investment ratio are both constant, carry out comparative dynamic analysis and discuss the model's policy implications.

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Year of publication:	2006
Authors:	Ott, Ingrid ; Soretz, Susanne
Publisher:	Lüneburg : Leuphana-Univ.
Subject:	Investition \| Infrastrukturinvestition \| Bottleneck \| Anpassungskosten \| Dynamisches Gleichgewicht \| Theorie

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Series:	University of Lüneburg working paper series in economics ; 26
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	511654278 [GVK] hdl:10419/28120 [Handle]
Classification:	D21 - Firm Behavior ; H40 - Publicly Provided Goods. General ; H54 - Infrastructures; Other Public Investment and Capital Stock ; O16 - Financial Markets; Saving and Capital Investment
Source:	EconStor