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

For the purposes of my theory I need two hypotheses: 1) Beyond a point the stimulation of private investment must lead to the creation of new capacity. This is becuase the possibilities of replacing old equipment prematurely by technically superior new equipment H/ltw 0//vi'Wws5' are getting exhausted,, because you cannot go on reducing the life-time of equipment bhks indefinitely. 2) There is a very strong tendency to dump the output of new capacity abroad and not on the home market. Firms prefer to leave the oligopolistic equilibrium in the home market undist urbed and retain their traditional mark up there. Their aggressive behaviour is t urned towards the foreign markets where they compete with all means especially price comp etition. The essential assumption is that firms act as discriminating monopolies which charge different prices in different markets. They will try to cover their fix cost by sales on the home market at conventional mark up. The excess will be sold abroad at a lower mark up. The objection that this may not be possible in conditions like a common market with free trade is only partly valid. The goods will not easily flow back unless the price difference is fairly big. To bring bark the cheapened commidities requires an importer i.e. a whole organisation and that cost?a certain margin. This explains that in fact goods are often cheaper than in the country of origin. The import margin acts like a customs duty.

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