
Abstract
We study a two-player dynamic investment model with information externalities and provide necessary and sufficient conditions for a unique switching equilibrium. When the public information is sufficiently high and a social planer therefore expects an investment boom, investments should be taxed. Conversely, any positive investment tax is suboptimally high if the public information is sufficiently unfavorable.We also show that an investment tax may increase overall investment activity.
Item Type: | Paper |
---|---|
Keywords: | Information Externality, Strategic Waiting, Delay, Information Cascade, Investment Boom, Optimal Taxation |
Faculties: | Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A8 - Strategische Erzeugung und Weitergabe von Informationen |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | D62, D83 |
URN: | urn:nbn:de:bvb:19-epub-13248-7 |
Language: | English |
Item ID: | 13248 |
Date Deposited: | 10. Jul 2012, 13:07 |
Last Modified: | 04. Nov 2020, 12:53 |