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Albagli, Elias, Hellwig, Christian
and Tsyvinski, Aleh
(2023)
Imperfect Financial Markets and Investment Inefficiencies.
American Economic Review, vol. 113 (n° 9).
pp. 2323-2354.
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Abstract
We analyze the consequences of noisy information aggregation for investment. Market imperfections create endogenous rents that cause overinvestment in upside risks and underinvestment in downside risks. In partial equilibrium, these inefficiencies are particularly severe if upside risks are coupled with easy scalability of investment. In general equilibrium, the shareholders' collective attempts to boost value of individual firms leads to a novel externality operating through price that amplifies investment distortions with downside risks but offsets distortions with upside risks.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | September 2023 |
| Refereed: | Yes |
| Place of Publication: | Nashville |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 20 Jul 2023 14:46 |
| Last Modified: | 27 Feb 2025 10:31 |
| OAI Identifier: | oai:tse-fr.eu:128188 |
| URI: | https://publications.ut-capitole.fr/id/eprint/48073 |
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Imperfect Financial Markets and Investment Inefficiencies. (deposited 24 Apr 2018 09:40)
- Imperfect Financial Markets and Investment Inefficiencies. (deposited 20 Jul 2023 14:46) [Currently Displayed]
