When should firms invest in old capital?

Should a country invest more in human or physical capital?

Should a country invest more in human or physical capital? The present paper addresses this issue, considering the impact of different factor intensities between sectors on both optimal human and physical capital accumulation. Using a two-sector overlapping generations setting with endogenous growth driven by human capital accumulation, we prove that relative factor intensity between sectors dr...

When Do Firms Invest in Privacy-Preserving Technologies?

Privacy is a central concern in the information age. In some circumstances, customers’ decisions whether to use firms’ services rely on the extent of privacy that firms are able to provide, for example, the use of certain banking services, health care information technology [7]...etc. Firms thus face crucial assessment of investment on privacypreserving technologies. Two important factors affec...

When Should Firms Offer Free Trials?

A monopolist can offer free samples or free returns to let consumers try his product. When the cost of offering free trials is negligible, the standard theory (Milgrom 1981, Grossman 1981) predicts unraveling: the monopolist always offers them to reveal his product’s quality. I show that when products differ in vertical quality and a horizontal attribute, unraveling may not occur. When consumer...

Should U.S. Investors Invest Overseas?

I nterest in foreign investment has been high among U.S. investors in recent years. The unprecedented growth of 401k pension plans has greatly increased the number of people who must make their own investment decisions in planning for their retirement. Many investors know that geographic diversification can improve investment returns without increasing risk. However, whether or not to invest ab...

Should You Invest in the Long Tail?