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Article Dans Une Revue American Economic Review Année : 2023

Imperfect Financial Markets and Investment Inefficiencies

Résumé

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.
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Dates et versions

hal-04210328 , version 1 (18-09-2023)

Identifiants

Citer

Elias Albagli, Christian Hellwig, Aleh Tsyvinski. Imperfect Financial Markets and Investment Inefficiencies. American Economic Review, 2023, 113 (9), pp.2323-2354. ⟨10.1257/aer.20170725⟩. ⟨hal-04210328⟩
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