A Micro Econometric Model of Capital Utilization and Retirement

Sanghamitra Das

No 3568, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper presents a micro econometric model of capital utilization and retirement. Some estimates of a firm's discrete decision problem with regard to an existing piece of capital--whether to operate, hold idle or retire it--are obtained, in the context of the US cement industry, by solving a discrete choice stochastic dynamic programming model. The estimates are then used to simulate effects of product and input price changes, and changes in the size and age of capital on a firm's propensity to operate, hold idle and retire capital.

Date: 1990-12
Note: PR
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Published as Review of Economic Studies Volume 59, pp.277-297 April 1992

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