Allocation Mechanism of Industrial Investment and Production Capacity:Evidence of 5022 Data from Listed Manufacturing Companies in 2006-2014

Allocation Mechanism of Industrial Investment and Production Capacity:Evidence of 5022 Data from Listed Manufacturing Companies in 2006-2014


Author:Sun Wei, Dong Kaiqiang  Journal:[Working Paper]  Date:2017(3)

Keywords Market Signals;Capacity Allocation;Market Transmission Mechanism

Abstract

First of all, the mathematical model of investment under uncertainty and the asset specificity and the method of numerical simulation were used in this paper, theoretically proving that production capacity excessively enter during market boom period while production capacity rigidly exits during market recession period. Secondly, Based on the large sample, 5022 statistical data of listed Chinese companies in manufacturing industry from 2006 to 2014, design indexes reflecting the market demand and price, construct two econometric equations containing investment and production capacity to embody the increment and stock of capacity allocation, adopt empirical analysis on the formation and evolution of the market transmission mechanism about corporation investment and the state of capacity allocation. The study found that in the period of expansion of market, enter of corporation investment and formation of production capacity induced by the signals of market demand and price described as

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