Twetch ·
Malinvestment comes just as easily from a resistance to change as from investments that appear rational given a distortion of localized knowledge, i.e. a distorted price signal.
When investments are mismatched with real conditions, that is malinvestment.
Replies
Twetch ·
Entrenched institutions are usually the largest sources of malinvestment due to a resistance to change. However, in a healthy economy, the failure of such a company doesn't drag everyone else down. Instead, their failure frees up resources for others.
Twetch ·
Clear examples of this include Kodak and Blockbuster, but nearly every once-successful company, whether they failed completely or merely subsided into obscurity, is an example of this in some way or another.