Investment Subsidies with Spillovers and Endogenous Private Information
Event details
| Date | 13.12.2024 |
| Hour | 11:45 › 13:00 |
| Speaker | Alessandro Pavan - Northwestern University |
| Location |
UniL Campus, Room Extra 126
|
| Category | Conferences - Seminars |
| Event Language | English |
How should firms be incentivized to invest efficiently (e.g., in AI or the supply of smart inputs) when such investments come with spillovers and their profitability depends on uncertain aggregate economic conditions? We show that firms can be encouraged to collect information and then use it in society’s best interest through a subsidy that resembles a Pigouvian correction but accounts for the non-verifiability of firms’ acquisition and usage of information. The same fiscal policy sustains efficiency in information acquisition and usage when prices are sticky, under an appropriate monetary policy that induces firms to disregard their endogenous private information when setting prices and only use it for investment purposes.
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Practical information
- Informed public
- Free