Our paper shows that investment by new firms responds to Tobin's Q much more elastically than does investment by incumbent firms. To explain this fact we build a model in which the investment-supply curve of incumbent firms is highly elastic and positively related to Q. However, when variation...

This paper develops a set of criteria for identifying the arrival of a general purpose technology (GPT) and applies them to the electification and IT "revolutions" of the late 19th and early 20th centuries. The criteria suggest that a GPT should be 1) pervasive, 2) improving over time, and 3)...

The main implications of the Q-theory of mergers are tested for United States and seven continental European countries in both the domestic and cross-border cases. I find that European firms, much like those in the United States, tend to use mergers and acquisitions to make large increases in...