A Putty-Clay Model of Demand Uncertainty and Investment

Arbeitspapier

This paper uses a simple model to explore the effects of 'increasing demand risk' on business fixed investment. We show that within a putty-clay framework an increase in demand uncertainty can be expected to have two countervailing effects. On the one hand increasing risk tends to induce a firm to increase its capacity, but on the other hand the optimal capital intensity of that capacity decreases.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IUI Working Paper ; No. 20

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: Firm investment ; Firm strategy ; Production

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Albrecht, James W. ; Hart, Albert G.
• Event: Veröffentlichung
• (who): The Research Institute of Industrial Economics (IUI)
• (where): Stockholm
• (when): 1979

Further information

• Handle: http://hdl.handle.net/10419/94711
• Last update: 10.03.2025, 11:42 AM CET