When should firms invest in old capital?
By: Boyan Jovanovic.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- working paper 14000; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 14000.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper studies optimal investment policies when the production function depends on capital of various vintages.  In such an environment it is natural to ask whether the firm will invest in old-vintage capital at all.  In this paper I derive such a condition.  Predictably, investment in old capital takes place if the elasticity of substitution between old and new capital is low, and when the depreciation of capital is high.  But other parameters such as the rates of technological progress and depreciation matter as well"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 7/9/2008.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.