Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/94711 
Year of Publication: 
1979
Series/Report no.: 
IUI Working Paper No. 20
Publisher: 
The Research Institute of Industrial Economics (IUI), Stockholm
Abstract: 
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.
Subjects: 
Firm investment
Firm strategy
Production
JEL: 
D92
L11
Document Type: 
Working Paper

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