Economics, Econometrics and Finance
4 years ago

Investment in Plant Capital Drives Prices, Shaping Market Competition.

2 views
RePEc: Research Papers in Economics
Price and investment dynamics: theory and plant level data
Charlotte Bucht, Nils Gottfries, Tomas Lindström, Magnus Lundin

Paper Summary

The article discusses how prices and investments in companies are related. The researchers created a model to show how firms set prices based on costs and competitors' prices, and how they invest in physical assets. They studied data from Swedish manufacturing plants and found that prices are influenced by investments, but more so than expected.

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