Electronic Resource
Springer
International tax and public finance
5 (1998), S. 449-469
ISSN:
1573-6970
Keywords:
monopolistic competition
;
diversification of production
;
investment multiplier
;
underaccumulation of capital
;
small businesses
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract The paper proposes an intertemporal equilibrium model that highlights the interdependence between aggregate investment and the degree of product differentiation with free entry of monopolistic producers. An investment externality is identified that results in underaccumulation of capital in the decentralized market equilibrium. Some form of investment promotion is called for. The paper compares the effectiveness of a general investment tax credit and an ad valorem output subsidy with policies that favor smaller business size. It is also shown that the complementarity among individual investments creates a potentially powerful investment multiplier.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1023/A:1008693121752
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