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Robust Control and Hot Spots in Spatiotemporal Economic Systems

Author

Listed:
  • Athanasios Yannacopoulos
  • Anastasios Xepapadeas
  • William Brock

Abstract

We formulate stochastic robust optimal control problems, motivated by applications arising in interconnected economic systems, or spatially extended economies. We study in detail linear quadratic problems and nonlinear problems. We derive optimal robust controls and identify conditions under which concerns about model misspecification at specific site(s) could cause regulation to break down, to be very costly, or to induce pattern formation and spatial clustering. We call sites associated with these phenomena hot spots. We also provide an application of our methods by studying optimal robust control and the potential break down of regulation, due to hot spots, in a model where utility for in situ consumption is distance dependent. Copyright Springer Science+Business Media New York 2014
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Athanasios Yannacopoulos & Anastasios Xepapadeas & William Brock, "undated". "Robust Control and Hot Spots in Spatiotemporal Economic Systems," DEOS Working Papers 1223, Athens University of Economics and Business.
  • Handle: RePEc:aue:wpaper:1223
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    File URL: http://wpa.deos.aueb.gr/docs/BXY_robust_control_(subm26July2012).pdf
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    References listed on IDEAS

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    6. James E. Wilen, 2007. "Economics of Spatial-Dynamic Processes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1134-1144.
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    Citations

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    Cited by:

    1. William Brock & Anastasios Xepapadeas & Athanasios Yannacopoulos, 2014. "Spatiotemporal robust control in infinite dimensional spaces," DEOS Working Papers 1405, Athens University of Economics and Business.
    2. Bondarev, Anton & Krysiak, Frank C., 2017. "Temporary and permanent technology lock-ins in the quality-differentiated Bertrand competition," Working papers 2017/09, Faculty of Business and Economics - University of Basel.
    3. Anastasios Xepapadeas & Athanasios Yannacopoulos, 2018. "Spatially Structured Deep Uncertainty, Robust Control, and Climate Change Policies," DEOS Working Papers 1807, Athens University of Economics and Business.
    4. Anton Bondarev & Frank C. Krysiak, 2017. "Robust policy schemes for R&D games with asymmetric information," Working papers 2017/14, Faculty of Business and Economics - University of Basel.

    More about this item

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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