competitors. Because workers participate in the returns on investment while only firms bear the costs, investment is inefficiently … low. A binding minimum wage can achieve the first--best level of investment, both in the short run for a given number of … firms and in the long run when the number of firms is endogenous. -- holdup ; investment ; minimum wage …

between business formation and medium run growth. An investment externality is identified that results in underaccumulation of … capital in the decentralized market equilibrium and, thus, creates an investment multiplier. Some form of investment promotion … is called for. The paper compares the effectiveness of policies to promote business formation with a general investment …