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The Impact Of Information On Land Development: A Dynamic And Stochastic Analysis

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  • Batabyal, Amitrajeet A.

Abstract

In a two-period model, economists such as K.J. Arrow, A.C. Fisher, and C. Henry, have shown that when development is both indivisible and irreversible, a developer who ignores the possibility of obtaining new information about the outcome of such development will invariably underestimate the benefits of preservation and hence favor development. In this note, I extend the AFH analysis in two directions. I model the land development problem in a dynamic framework, explicitly specifying an information production function. In such a setting, I then ask and answer the question concerning when development should take place. Forthcoming in Journal of Environmental Management

Suggested Citation

  • Batabyal, Amitrajeet A., 1995. "The Impact Of Information On Land Development: A Dynamic And Stochastic Analysis," Economics Research Institute, ERI Study Papers 28356, Utah State University, Economics Department.
    • Handle: RePEc:ags:usuesp:28356
    DOI: 10.22004/ag.econ.28356
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    References listed on IDEAS

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    1. Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 4, pages 76-84, Palgrave Macmillan.
    2. Epstein, Larry G, 1980. "Decision Making and the Temporal Resolution of Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(2), pages 269-283, June.
    3. Hanemann, W. Michael, 1989. "Information and the concept of option value," Journal of Environmental Economics and Management, Elsevier, vol. 16(1), pages 23-37, January.
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    Keywords

    Land Economics/Use;

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