According to prevailing theory, firms diversify in response to excess capacity of factors that are subject to market failure. By probing into the heterogeneity of these factors, we develop the corollary that firms that elect to diversijjy most widely should expect the lowest average rents. An empirical test, with Tobin's q as the measure of rents, is consistent with this theory.
CITATION STYLE
Montgomery, C. A., & Wernerfelt, B. (1988). Diversification, Ricardian Rents, and Tobin’s q. The RAND Journal of Economics, 19(4), 623. https://doi.org/10.2307/2555461
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