This paper analyzes an intertemporal production-investment model of the firm, which includes as a special case the adjustment cost model. Properties of the optimal value function are related to properties of the quasi-profit function. An intertemporal analogue of Hotelling's Lemma is derived, which allows derivation of optimal investment demand equations from knowledge of the optimal value function alone. A simple example illustrates the main results.
MLA
McLaren, Keith R., and Russel J. Cooper. “Intertemporal Duality: Application to the Theory of the Firm.” Econometrica, vol. 48, .no 7, Econometric Society, 1980, pp. 1755-1762, https://www.jstor.org/stable/1911933
Chicago
McLaren, Keith R., and Russel J. Cooper. “Intertemporal Duality: Application to the Theory of the Firm.” Econometrica, 48, .no 7, (Econometric Society: 1980), 1755-1762. https://www.jstor.org/stable/1911933
APA
McLaren, K. R., & Cooper, R. J. (1980). Intertemporal Duality: Application to the Theory of the Firm. Econometrica, 48(7), 1755-1762. https://www.jstor.org/stable/1911933
We are deeply saddened by the passing of Kate Ho, the John L. Weinberg Professor of Economics and Business Policy at Princeton University and a Fellow of the Econometric Society. Kate was a brilliant IO economist and scholar whose impact on the profession will resonate for many years to come.
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