Investment coordination and demand complementarities

Jean-Marie Baland and Patrick Francois ()

Economic Theory, 1999, vol. 13, issue 2, 495-505

Abstract: This paper establishes necessary conditions for demand complementarity to imply investment coordination failure and explores the welfare implications of coordinated investment. Our main results caution against demand complementarities as a motive for investment coordination. We find that: 1) generally, a strict notion of complementarity (Hicks) is necessary for the existence of an investment coordination problem and 2) that when the problem does exist, coordination lowers social welfare without countervailing sectoral asymmetries.

Keywords: The; Big; Push; ·; Coordination; failures. (search for similar items in EconPapers)
JEL-codes: L13 L16 O14 O33 (search for similar items in EconPapers)
Date: 1999-02-17
Note: Received: June 19, 1996; revised version: December 5, 1997
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Citations: View citations in EconPapers (2)

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Working Paper: Investment Coordination and Demand Complementarities (1996)
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