Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189252 
Year of Publication: 
1996
Series/Report no.: 
Queen's Economics Department Working Paper No. 933
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
This paper analyzes the possibility of investment coordination leading to outcomes which dominate non-investment equilibria in the presence of monopolistic competition. We establish when complementarity leads to investment coordination failures and explore the welfare implications of coordinated investment. Our main results caution against demand complementarities as a motive for investment coordination. We find that: 1) generally, a strict notion of complementarity (Hicks) is necessary for the existence of an investment coordination problem and 2) that when the problem does exist, coordination often lowers social welfare.
JEL: 
O14
O33
L13
L16
Document Type: 
Working Paper

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