1 option
When Should Firms Invest in Old Capital? / Boyan Jovanovic.
- Format:
- Book
- Author/Creator:
- Jovanovic, Boyan.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w14000.
- NBER working paper series no. w14000
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2008.
- Summary:
- This paper studies optimal investment policies when the production function depends on capital of various vintages. In such an environment it is natural to ask whether the firm will invest in old-vintage capital at all. In this paper I derive such a condition. Predictably, investment in old capital takes place if the elasticity of substitution between old and new capital is low, and when the depreciation of capital is high. But other parameters such as the rates of technological progress and depreciation matter as well.
- Notes:
- Print version record
- May 2008.
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