Policies of Stimulating Private Investment

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Policies of Stimulating Private Investment

Author:: Steindl, Josef

Scope:: Typoskript, 6 Blätter; mit handschriftlichen Anmerkungen und Anstreichungen.

Year of publication:: ohne Datum

Language:: English

Topic:: Firm and market structure

JEL Classification:: D43 [Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection]

Shelfmark:: S/M.45.1

DOI:: https://doi.org/10.48671/nls.js.AC14446075

Policies of Stimulating Private Investment /> As a start to the following discussion we discuss the way- in which the policy of tax allowances to investors works. Roughly speaking it means that, if the investor can write off say one fourth of the investment straight away his expected , because %. 1 fv Jj Ip^ kA' \ y* fu 4 ' profit rate will be increased by a factor of his capital investment is effectively reduced by the amount of the permitted immediate depreciation. Now let us distinguish two cases, in one case the point of the policy is not to increase investment because that is given beforehand as a matter of public policy: That is A V' 1 the case of power stations and perhaps other utilities. They are obliged to provide an adequate capacity and the question is only that of finance and price of the electricity. They could finance by charging an adequate price which would give them sufficient retained profit - the Eichnerian policy ( again they could borrow if the price of electricty would be suffincient to permit them to service the debt ). Now the tax allowance in these cases is obviously a means of subsidising the buyer of electricity by a lower than "market" price, which the utility will be enabled to charge. The other case is that in which the tax policy aims at increasing the investment. The prospect of an increased profit rate to be expected should induce additional investment. Now an essential worry of any investor is whether he will find the market for the additional capacity created. It may be objected that not all investment need involve additional capacity and in these cases our considerations will not apply. This has to be accepted with the proviso that

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