Asset bubbles and product market competition

• 成果类型: Article
• 署名作者: Queiros, Francisco
• 署名单位: University of Naples Federico II; University of Naples Federico II
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE5066
• 发表日期: 2024-01-01
• 页码: 325-364
• 关键词: Rational bubbles; overaccumulation; COMPETITION; market power; E44; L13; L16

摘要

This paper studies the interplay between asset bubbles and product market competition. It offers two main insights. The first is that imperfect competition creates a wedge between interest rates and the marginal product of capital. This makes rational bubbles possible even when there is no overaccumulation of capital. The second is that when providing a production subsidy, bubbles stimulate competition and reduce monopoly rents. I show that bubbles can destroy efficient investment and have ambiguous welfare consequences. However, when they stimulate competition, they can have crowding-in effects on capital.