Irreversible investments revisited
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Irreversible investments revisited. / Sandal, Leif K.; Steinshamn, Stein I.; Hoff, Ayoe.
In: Marine Resource Economics, Vol. 22, No. 3, 2007, p. 255-266.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Irreversible investments revisited
AU - Sandal, Leif K.
AU - Steinshamn, Stein I.
AU - Hoff, Ayoe
PY - 2007
Y1 - 2007
N2 - A multi-dimensional, non-linear dynamic model in continuous time is presented for the purpose of finding the optimal combination of exploitation and capital investment in optimal renewable resource management. Non-malleability of capital is incorporated in the model through an asymmetric cost-function of investment, and investments can be both positive and negative. Exploitation is controlled through the utilisation rate of available capital. A novel feature in this model is that there are costs associated with the available capital whether it is utilised or not. And, in contrast to most of the previous literature, the state variables, namely the physical capital and the biological resource, enter the objective function. Due to the nonlinearities in this model some of the results are in sharp contrast to previous literature.
AB - A multi-dimensional, non-linear dynamic model in continuous time is presented for the purpose of finding the optimal combination of exploitation and capital investment in optimal renewable resource management. Non-malleability of capital is incorporated in the model through an asymmetric cost-function of investment, and investments can be both positive and negative. Exploitation is controlled through the utilisation rate of available capital. A novel feature in this model is that there are costs associated with the available capital whether it is utilised or not. And, in contrast to most of the previous literature, the state variables, namely the physical capital and the biological resource, enter the objective function. Due to the nonlinearities in this model some of the results are in sharp contrast to previous literature.
KW - Former LIFE faculty
KW - Irreversible investments, non-malleable capital, renewable resources
M3 - Journal article
VL - 22
SP - 255
EP - 266
JO - Marine Resource Economics
JF - Marine Resource Economics
SN - 0738-1360
IS - 3
ER -
ID: 8085508