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Optimal Control and Resources

Author

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  • Micahel Caputo

    () (University of Central Florida, Orlando, FL)

Abstract

Necessary and sufficient conditions from optimal control theory that are typically used when studying finite and infinite horizon natural resource economics problems are stated. In the finite horizon case their use is demonstrated by deriving an explicit solution of a model describing the optimal cleanup of a hazardous stock. In the infinite horizon case a qualitative characterization of the solution of a renewable resource extraction problem is achieved by employing a phase diagram. Complementary techniques such as comparative dynamics and dynamic envelope results are also employed in order to demonstrate how to extract the maximum amount of information from natural resource economics problems.

Suggested Citation

  • Micahel Caputo, 2011. "Optimal Control and Resources," Working Papers 2011-07, University of Central Florida, Department of Economics.
  • Handle: RePEc:cfl:wpaper:2011-07
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    File URL: https://www.itd.bus.ucf.edu/cdn/economics/workingpapers/2011-07.pdf
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    References listed on IDEAS

    as
    1. Olli Tahvonen, 1991. "On the dynamics of renewable resource harvesting and pollution control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(1), pages 97-117, March.
    2. Barrett, Scott, 1991. "Optimal soil conservation and the reform of agricultural pricing policies," Journal of Development Economics, Elsevier, vol. 36(2), pages 167-187, October.
    3. LaFrance, Jeffrey T. & Barney, L. Dwayne, 1991. "The envelope theorem in dynamic optimization," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 355-385, April.
    4. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586, May.
    5. Caputo, Michael R., 1990. "A qualitative characterization of the competitive nonrenewable resource extracting firm," Journal of Environmental Economics and Management, Elsevier, vol. 18(3), pages 206-226, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    optimal control theory; necessary conditions; sufficient conditions; transversality conditions; comparative dynamics; dynamic envelope theorem; phase diagram;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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