Solving optimal timing problems in environmental economics
نویسندگان
چکیده
Two papers of Pindyck (2000, 2002) that modeled the control of stock pollutants as optimal stopping problems contained closed form solutions that are incorrect. This paper discusses a subtle error in the derivation and demonstrates how solutions to these and related problems can be obtained numerically. The numerical solutions are contrasted with the ones contained in Pindyck’s original papers. 2011 Elsevier B.V.Elsevier B.V. All rights reserved. * Corresponding author. Tel.: +1 919 531 1656; fax: +1 919 677 4444. E-mail addresses: [email protected] (M. Balikcioglu), [email protected] (P.L. Fackler), [email protected] (R.S. Pindyck).
منابع مشابه
Optimal timing problems in environmental economics
Because of the uncertainties and irreversibilities that are often inherent in environmental degradation, its prevention, and its economic consequences, environmental policy design can involve important problems of timing. I use a simple two-period model to illustrate these optimal timing problems and their implications for environmental policy. I then lay out and solve a continuous-time model o...
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