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Investment interdependence and the coordination of lumpy investments: evidence from the British brick industry

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Abstract:

The brick industry is characterized by regional markets, lumpy capacity increments and high fixed costs. In such an industry, the coordination of rival expansions in capacity can be crucial to the profitability of those expansions. Evidence from the British brick industry suggests that excess investments are generally avoided, but there is little support for existing theories to explain how this is achieved. The explanation for how coordination failures are avoided is based on firm heterogeneity, the regional dimension to the investment decision and the prospects for, and consequences of, growth by acquisition.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/0003684042000287646

Affiliations: Department of Accounting Finance and Management University of Essex Wivenhoe Park Colchester CO4 3SQ UK, Email: wooda@essex.ac.uk

Publication date: January 1, 2005

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