## A Model of Investment and Capacity Utilization |

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Abel Academia Sinica adjustment cost assume assumption Bailey and Scarth capacity utilization capital depreciation capital installed capital service capital stock capital utilization rate concave function corporate tax cost of investment decision rules denote depreciation allowance depreciation of capital discount rate due to increased equilibrium firm's optimization behavior framework Hence imputed value increasing function induce the firm Insert Figure installed capital interval dt Investment And Capacity investment tax credit investment theory investment-capital ratio Kee-Nam Cheung locus marginal costs marginal revenue product market value maximize the present mPFi neoclassical Note optimality conditions output PF(mK physical depreciation present value product of capital production function pure economic rent rate of capital rate of investment rate of return realized rate realized return relationship required rate saddle point Section shadow price Shu-Wen Chao Tamkang University tax parameters TOBIN'S q transversality conditions unit of capital value of capital value of marginal variable