The paper considers intersectoral capital mobility in the context of investment theory. Convex costs of adjustment explain imperfect mobility of capital between sectors. Stocks of capital are endogenous; the model essentially is a twosector growth model with Keynesian investment functions. The...

Sugden (2000) offers an answer to the question of how unrealistic models can be used to explain real-world phenomena: by considering a set of unrealistic models, one may conclude that a result common to these models also holds for a realistic model that, however, is too complex to be analyzed,...