Queirós, Francisco - In: Theoretical Economics 19 (2024) 1, pp. 325-364
This paper studies the interplay between asset bubbles and product market competition. It offers two main insights. The … first is that imperfect competition creates a wedge between interest rates and the marginal product of capital. This makes … subsidy, bubbles stimulate competition and reduce monopoly rents. I show that bubbles can destroy efficient investment and …