@TechReport{iza:izadps:dp15744,
            	author={Chetty, V. K. and Heckman, James J.},
            	title={Internal Adjustment Costs of Firm-Specific Factors and the Neoclassical Theory of the Firm},
            	year={2022},
	month={Nov},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={15744},
            	url={https://www.iza.org/publications/dp15744},
	abstract={This paper considers the consequences of a two-sector vertically-integrated model of firms producing output using firm-specific capital with a second sector producing firm-specific capital by adapting raw capital purchased in the market. Analysts rarely observe each sector separately. Aggregating over both sectors produces short-run and long-run factor demand functions that appear to be perverse, but when disaggregated obey standard neoclassical properties. Adjustment costs create the appearance of static inefficiency in the presence of dynamic efficiency.},
	keywords={firm-specific capital;frontier production theory;factor demand;adjustment costs},
            }