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Optimal pattern of technology adoption under embodiment with a finite planning horizon : A multi-stage optimal control approach

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  • Huseyin cagri SAGLAM

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

By deriving the necessary conditions for a multi-stage discounted optimal control problem where the endogenous switching instants between regimes appear as an argument of the objective function and the state equation, we analyze the optimal pattern of technology adoption under embodiment with a finite planning horizon. The economy is characterized by the existence of an exogenously growing technology frontier and technology specific learning by doing. We obtain time varying durations for the adopted technologies to be in use due to finite planning horizon. We analyze numerically the effects of planing horizon, speed of learning, growth rate of technology and impatience rate on the optimal pattern.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2002031.

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Length: 26
Date of creation: 01 Jun 2002
Date of revision:
Handle: RePEc:ctl:louvir:2002031

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Keywords: Multi-stage optimal control; technology adoption; learning by doing; embodiment;

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References

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  1. Mateos-Planas, Xavier, 2004. "Technology adoption with finite horizons," Journal of Economic Dynamics and Control, Elsevier, vol. 28(11), pages 2129-2154, October.
  2. Xavier Mateos-Planas, 2001. "Schooling and Distortions in a Vintage Capital Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(1), pages 127-158, January.
  3. Jovanovic, Boyan & Nyarko, Yaw, 1996. "Learning by Doing and the Choice of Technology," Econometrica, Econometric Society, vol. 64(6), pages 1299-1310, November.
  4. Tomiyama, Ken & Rossana, Robert J., 1989. "Two-stage optimal control problems with an explicit switch point dependence : Optimality criteria and an example of delivery lags and investment," Journal of Economic Dynamics and Control, Elsevier, vol. 13(3), pages 319-337, July.
  5. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1995. "Long-Run Implications of Investment-Specific Technological Change," UWO Department of Economics Working Papers 9510, University of Western Ontario, Department of Economics.
  6. Jeremy Greenwood & Boyan Jovanovic, 2000. "Accounting for Growth," RCER Working Papers 475, University of Rochester - Center for Economic Research (RCER).
    • Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters, in: New Developments in Productivity Analysis, pages 179-224 National Bureau of Economic Research, Inc.
  7. Maccini, Louis J., 1973. "On optimal delivery lags," Journal of Economic Theory, Elsevier, vol. 6(2), pages 107-125, April.
  8. Tomiyama, Ken, 1985. "Two-stage optimal control problems and optimality conditions," Journal of Economic Dynamics and Control, Elsevier, vol. 9(3), pages 317-337, November.
  9. Boyan Jovanovic & Rafael Rob, 1997. "Solow vs. Solow: Machine Prices and Development," NBER Working Papers 5871, National Bureau of Economic Research, Inc.
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Cited by:
  1. repec:hal:cesptp:halshs-00115685 is not listed on IDEAS
  2. Ragot, Lionel & Schubert, Katheline, 2008. "The optimal carbon sequestration in agricultural soils: Do the dynamics of the physical process matter?," Journal of Economic Dynamics and Control, Elsevier, vol. 32(12), pages 3847-3865, December.
  3. repec:hal:journl:halshs-00115685 is not listed on IDEAS

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