Investment Coordination and Demand Complementarities

Posted: 22 Jun 1999

See all articles by Jean-Marie Baland

Jean-Marie Baland

Facult├ęs Universitaires Notre-Dame de la Paix (FUNDP)

Patrick Francois

University of British Columbia (UBC) - Department of Economics

Abstract

This paper establishes necessary conditions for demand complementarity to imply investment coordination failure and explores 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 lowers social welfare without countervailing sectoral asymmetries.

JEL Classification: O14, O33, L13, L16

Suggested Citation

Baland, Jean-Marie and Francois, Patrick, Investment Coordination and Demand Complementarities. Available at SSRN: https://ssrn.com/abstract=151472

Jean-Marie Baland

Facult├ęs Universitaires Notre-Dame de la Paix (FUNDP) ( email )

8 Rempart de la Vierge
B-5000 Namur
Belgium

Patrick Francois (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
528
PlumX Metrics