We develop a theoretical model of long-run investment decisions on capacity in the context of a liberalized electricity … the level of capacity that maximizes social welfare, and compare it to a decentralized outcome. We show that in the … absence of any regulation, private investment decisions on capacity unambiguously lead to a socially sub-optimal outcome, and …

a model in which facilities can produce output at a privately known cost up to a previously-determined capacity level …. In such a model, the amount of slack in the firm is shown to be pro-cyclical. Indeed, as capacity constraints become … capacity. …

This paper compares how cash and in-kind transfers affect local prices. Both types of transfers increase the demand for … normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash …

This Paper documents four basic facts about investment goods and investment prices. First, investment has a very …