On 28th November OxTalks will move to the new Halo platform and will become 'Oxford Events' (full details are available on the Staff Gateway).
There will be an OxTalks freeze beginning on Friday 14th November. This means you will need to publish any of your known events to OxTalks by then as there will be no facility to publish or edit events in that fortnight. During the freeze, all events will be migrated to the new Oxford Events site. It will still be possible to view events on OxTalks during this time.
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Most of the world’s firms are small, particularly in poor economies. We argue that the existence of indivisibilities of inputs is a key driver of capacity underutilisation in small firms, leading to the endogenous emergence of slack. We present a monopoly model of capacity choice in which one of the inputs is subject to an integer constraint and show how pricing, input choices and investment are non-trivial functions of firm size, with important implications for aggregate economic outcomes in spatial general equilibrium. We validate the model using experimental field data from a large-scale clustered cash transfer RCT in Western Kenya. Building on novel measures of capacity utilisation, we uncover four moments: (1) Slack is larger in small firms, (2) supply curves are highly elastic, particularly where utilization is low, (3) aggregate inflation in response to the fiscal shock is low, (4) there exists some inflation in high-utilisation regions. Our findings can rationalise large multipliers in poor economies.
