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Internal Adjustment Costs of Firm-Specific Factors and the Neoclassical Theory of the Firm / V.K. Chetty, James J. Heckman.
- Format:
- Book
- Author/Creator:
- Chetty, V.K.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w30695.
- NBER working paper series no. w30695
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- This paper considers the consequences of a two-sector vertically-integrated model of firms producing output using firm-specific capital with a second sector producing firm-specific capital by adapting raw capital purchased in the market. Analysts rarely observe each sector separately. Aggregating over both sectors produces short-run and long-run factor demand functions that appear to be perverse, but when disaggregated obey standard neoclassical properties. Adjustment costs create the appearance of static inefficiency in the presence of dynamic efficiency.
- Notes:
- Print version record
- November 2022.
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