Sustainable infrastructure investment with labor-only production

Charles Tapiero, Konstantin Kogan

Research output: Contribution to journalArticle

Abstract

The purpose of this paper is to consider a partial equilibrium model for a sustainable infrastructure investment in a labor-production economy. We consider an inter-temporal Stackelberg game in a "capital primitive" economy where all capital investments are made by a Central Agency (a government). The government is assumed to have a number of objectives including sustainability of the infrastructure investments, while firms are assumed to be myopic, maximizing only current profits and paying taxes as a function of their returns. Both open-loop and closed-loop (feedback) Stackelberg strategies are considered. Based on the analysis of the investment game, some conclusions are drawn regarding the propensity to invest as a function of sustainability constraints, the taxation rates and employment levels. We then show that investments can tend to a constant level and thus strategic government goals of sustainability and employment growth can be planned only if labor costs and the general price index are steady or characterized by a set of conditions ensuring the attainability of the steady-state investment.

Original languageEnglish (US)
Pages (from-to)876-886
Number of pages11
JournalInternational Journal of Production Economics
Volume113
Issue number2
DOIs
StatePublished - Jun 2008

Fingerprint

Personnel
Sustainable development
Taxation
Government
Sustainability
Infrastructure investment
Labor
Profitability
Feedback
Costs
Partial equilibrium model
Employment growth
Labour costs
Tax
Production economies
Profit
Capital investment
Stackelberg
Stackelberg game
Investment game

Keywords

  • Infrastructure
  • Investment
  • Stackelberg equilibrium

ASJC Scopus subject areas

  • Economics and Econometrics
  • Industrial and Manufacturing Engineering

Cite this

Sustainable infrastructure investment with labor-only production. / Tapiero, Charles; Kogan, Konstantin.

In: International Journal of Production Economics, Vol. 113, No. 2, 06.2008, p. 876-886.

Research output: Contribution to journalArticle

@article{1f8f221763ac4b4f9b1c61015951a5d1,
title = "Sustainable infrastructure investment with labor-only production",
abstract = "The purpose of this paper is to consider a partial equilibrium model for a sustainable infrastructure investment in a labor-production economy. We consider an inter-temporal Stackelberg game in a {"}capital primitive{"} economy where all capital investments are made by a Central Agency (a government). The government is assumed to have a number of objectives including sustainability of the infrastructure investments, while firms are assumed to be myopic, maximizing only current profits and paying taxes as a function of their returns. Both open-loop and closed-loop (feedback) Stackelberg strategies are considered. Based on the analysis of the investment game, some conclusions are drawn regarding the propensity to invest as a function of sustainability constraints, the taxation rates and employment levels. We then show that investments can tend to a constant level and thus strategic government goals of sustainability and employment growth can be planned only if labor costs and the general price index are steady or characterized by a set of conditions ensuring the attainability of the steady-state investment.",
keywords = "Infrastructure, Investment, Stackelberg equilibrium",
author = "Charles Tapiero and Konstantin Kogan",
year = "2008",
month = "6",
doi = "10.1016/j.ijpe.2007.12.004",
language = "English (US)",
volume = "113",
pages = "876--886",
journal = "International Journal of Production Economics",
issn = "0925-5273",
publisher = "Elsevier",
number = "2",

}

TY - JOUR

T1 - Sustainable infrastructure investment with labor-only production

AU - Tapiero, Charles

AU - Kogan, Konstantin

PY - 2008/6

Y1 - 2008/6

N2 - The purpose of this paper is to consider a partial equilibrium model for a sustainable infrastructure investment in a labor-production economy. We consider an inter-temporal Stackelberg game in a "capital primitive" economy where all capital investments are made by a Central Agency (a government). The government is assumed to have a number of objectives including sustainability of the infrastructure investments, while firms are assumed to be myopic, maximizing only current profits and paying taxes as a function of their returns. Both open-loop and closed-loop (feedback) Stackelberg strategies are considered. Based on the analysis of the investment game, some conclusions are drawn regarding the propensity to invest as a function of sustainability constraints, the taxation rates and employment levels. We then show that investments can tend to a constant level and thus strategic government goals of sustainability and employment growth can be planned only if labor costs and the general price index are steady or characterized by a set of conditions ensuring the attainability of the steady-state investment.

AB - The purpose of this paper is to consider a partial equilibrium model for a sustainable infrastructure investment in a labor-production economy. We consider an inter-temporal Stackelberg game in a "capital primitive" economy where all capital investments are made by a Central Agency (a government). The government is assumed to have a number of objectives including sustainability of the infrastructure investments, while firms are assumed to be myopic, maximizing only current profits and paying taxes as a function of their returns. Both open-loop and closed-loop (feedback) Stackelberg strategies are considered. Based on the analysis of the investment game, some conclusions are drawn regarding the propensity to invest as a function of sustainability constraints, the taxation rates and employment levels. We then show that investments can tend to a constant level and thus strategic government goals of sustainability and employment growth can be planned only if labor costs and the general price index are steady or characterized by a set of conditions ensuring the attainability of the steady-state investment.

KW - Infrastructure

KW - Investment

KW - Stackelberg equilibrium

UR - http://www.scopus.com/inward/record.url?scp=43549109470&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=43549109470&partnerID=8YFLogxK

U2 - 10.1016/j.ijpe.2007.12.004

DO - 10.1016/j.ijpe.2007.12.004

M3 - Article

AN - SCOPUS:43549109470

VL - 113

SP - 876

EP - 886

JO - International Journal of Production Economics

JF - International Journal of Production Economics

SN - 0925-5273

IS - 2

ER -