1997/01/01 by Avinash Dixit, A. DIXIT · 130 citations
Economics, Econometrics and Finance · Psychology · #Capital (architecture) #Capital Investment and Risk Analysis #Capital investment #Computer science #Dynamic factor #Dynamics (music) #Econometrics #Economic Growth and Productivity #Economics #Factor (programming language) #Finance #Firm Innovation and Growth #Investment (military) #Microeconomics #Psychology #Ranking (information retrieval)
paper · doi:10.1093/oxfordjournals.oep.a028592
published in Oxford Economic Papers 49(1), 1-20 (Oxford University Press)
openalex publication_date 1997/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
A firm's stochastic dynamic investment and employment decisions are examined when each of capital and labor has linear adjustment costs of increase and decrease The analysis generates an endogenous ranking of the two factors as more or less flexible; thus the concepts of short and long runs are endogenized. Qualitative characteristics of the dynamics of the two factors are described Adjustment of the more flexible factor can occur on its own, but that of the less flexible factor occurs less frequently and only in conjunction with a complementary adjustment of the more flexible factor.