Strategic Investment and Endogenous Fluctuations

Par :

d’Aspremont, Claude [author]

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Type de matériel : Texte

TexteLangue : français Détails de publication : 2015. Ressources en ligne :

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Abrégé : We study an overlapping generations multisectoral economy, where firms in each sector live two periods, strategically investing in the first and producing under Cournot competition in the second period. Equilibrium conditions for the two-stage games, and on the product, labor and capital markets, determine the number of active firms and result in a two-equation dynamic system. The possibility of robust endogenous fluctuations coming from strategic investment is demonstrated by contrast with a model without strategic investment and with free entry.Codes JEL : E22, E32, L16.

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We study an overlapping generations multisectoral economy, where firms in each sector live two periods, strategically investing in the first and producing under Cournot competition in the second period. Equilibrium conditions for the two-stage games, and on the product, labor and capital markets, determine the number of active firms and result in a two-equation dynamic system. The possibility of robust endogenous fluctuations coming from strategic investment is demonstrated by contrast with a model without strategic investment and with free entry.Codes JEL : E22, E32, L16.