Uncertainty and Tobin’s Q in a Monopolistic Competition Framework

This 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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Year of publication:	1990-01-01
Authors:	Omar, LICANDRO
Institutions:	Institut de Recherche Économique et Sociale (IRES), École des Sciences Économiques de Louvain
Subject:	uncertainty \| competition \| demand \| investment policy

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Series:	Discussion Papers (IRES - Institut de Recherches Economiques et Sociales).
Type of publication:	Book / Working Paper
Notes:	The text is part of a series UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) Number 1990003 2 pages long
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004985092