The Market for Long-term Industrial Capital
The market for industrial capital is an important one for the individual company. The problems faced by the individual firm in raising finance have already been discussed in Chapter 4. This chapter is concerned not with those problems, but with the efficient working of the capital market and the firms and institutions which comprise it. The providers of industrial capital are important in their own right, as well as acting as intermediaries between savers and investors, between the ultimate suppliers of new capital and those who use it. Competitive forces are at work leading to the amalgamation of such institutions and the entry of new ones. Important barriers to entry may exist, creating imperfections in certain branches of the capital market. This does not mean that competition does not exist between the institutions of the capital market, but that it is limited. In contrast to the position in industrial activity and distribution, the most important measures of size of firm are not numbers employed or net output, but net capital employed or assets controlled.
KeywordsStock Market Stock Exchange Institutional Investor Pension Fund Share Price
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- 3.Suggested further reading: W. J. Baumol, ‘The Stock Market and Economic Efficiency’ (Fordham U.P., New York, 1965).Google Scholar