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Investment, Sales Constraints and Profitability in France, 1957-1985

  • Henri Sneessens (a1) and Bénédicte Maillard (a2)

Summary

This paper is devoted to the analysis of the investment behavior of the firm in the context of a quantity rationing (or disequilibrium) model with monopolistic competition on the goods market. Investment is entirely profit-driven as in the q-theory of investment. The profit variable is however decomposed into three components: the markup rate on variable costs, the capacity utilization rate and the discrepancy between the optimal and the actual-labor ratios. The model has the same long run implication as an accelerator model if and only if the optimal capacity utilization rate is constant in the long run. The suggested quantity rationing model is estimated on French data, over the period 1956-1985. The emphasis is on the investment equation. The parameter estimates are shown to have remained fairly stable over time.

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Keywords

Investment, Sales Constraints and Profitability in France, 1957-1985

  • Henri Sneessens (a1) and Bénédicte Maillard (a2)

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