Technology Adoption, Socila Learning, and Economic Policy

Paul Heidhues () and Nicolas Melissas

No 1002, Working Papers from Centro de Investigacion Economica, ITAM

Abstract: We study a two-player dynamic investment model with information externalities and provide necessary and sufficient conditions for a unique switching equilibrium. When the public information is sufficiently high and a social planer therefore expects an investment boom, investments should be taxed. Conversely, any positive investment tax is suboptimally high if the public information is sufficiently unfavorable. We also show that an investment tax may increase overall investment activity.

Keywords: Information Externality; Strategic Waiting; Delay; Information Cascade; Investment Boom; Optimal Taxation (search for similar items in EconPapers)
JEL-codes: D62 D83 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2010
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http://ftp.itam.mx/pub/academico/inves/melissas/10-02.pdf (application/pdf)

Related works:
Working Paper: Technology adoption, social learning, and economic policy (2010)
Working Paper: Technology Adoption, Social Learning, and Economic Policy (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cie:wpaper:1002

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