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Quantity Controls, License Transferability, and the Level of Investment / Kala Krishna, Ling Hui Tan, Ram Ranjan.
- Format:
- Book
- Author/Creator:
- Krishna, Kala.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w8796.
- NBER working paper series no. w8796
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2002.
- Summary:
- This paper models investment/entry decisions in a competitive industry that is subject to a quantity control on an input for production. The quantity control is implemented by auctioning licenses for the restricted input. The paper shows that liberalizing the quantity control could reduce investment in the industry under certain circumstances. Furthermore, the level of investment is quite different when licenses are tradable than when they are not. Key factors in the comparison include the elasticity of demand for the final good and the degree of input substitutability. Two examples are computed to illustrate the results.
- Notes:
- Print version record
- February 2002.
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