Investment in Fixed Capital and Competitive Industry Dynamics

Martin Currie and Ingrid Kubin ()

Oxford Economic Papers, 1997, vol. 49, issue 4, 521-42

Abstract: This paper explores the possibilities for complex dynamic behavior in an industry where a fixed capital good, once acquired and installed, is specific to that industry. A central theme is to understand the sorts of factors which can impose bounds on the behavior of market price and which can impart stability to the system. The analysis highlights the significance not only of the durability and specificity of physical capital goods but also of capacity (under-)utilization decisions and of the cautiousness of producers when expanding their capacities. Copyright 1997 by Royal Economic Society.

Date: 1997
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