Premium
Externalités informationnelles, délai stratégique et subventions optimales à l’investissement .
Author(s) -
Doyle Matthew
Publication year - 2010
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1540-5982.2010.01601.x
Subject(s) - subsidy , investment (military) , externality , incentive , government (linguistics) , economics , outcome (game theory) , microeconomics , private information retrieval , monetary economics , value (mathematics) , public economics , dynamic inconsistency , finance , market economy , linguistics , philosophy , statistics , mathematics , machine learning , politics , political science , computer science , law
This paper examines optimal government policy when private investment generates information, but investors cannot internalize the informational value their actions have to others. Equilibrium exhibits inefficient delay, as investors adopt a wait‐and‐see approach. The government can alter incentives via an investment subsidy, but complications arise, since future subsidies may induce investors to disregard current policy initiatives. The paper shows that the government achieves its desired outcome only when the the investment subsidy is financed by a non‐distortionary, lump‐sum tax. When taxation is distortionary, the government faces a time inconsistency problem that may prevent effective policy.