A dynamic programming approach to optimal pollution control under uncertain irreversibility: The Poisson case

Raouf Boucekkine (), Weihua Ruan () and Benteng Zou
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Weihua Ruan: Department of Mathematics and Statistics, Purdue University Northwest, USA

No 2022017, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We solve a bimodal optimal control problem with a non-concavity and uncertainty through a Poisson process underlying the transition from a mode to another. We use a dynamic programming approach and are able to uncover the global optimal dynamics (including optimal non-monotonic paths) under a few linear-quadratic assumptions, which do not get rid of the non-concavity of the problem. This is in contrast to the related literature on pollution control under irreversibility which usually explores local dynamics along monotonic solution paths to firstorder Pontryagin conditions.

Keywords: Multi-stage optimal control; Poisson process; HJB equations; irreversible pollution (search for similar items in EconPapers)
JEL-codes: C61 Q53 (search for similar items in EconPapers)
Date: 2022-07-21
New Economics Papers: this item is included in nep-ene and nep-env
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Working Paper: A dynamic programming approach to optimal pollution control under uncertain irreversibility: The Poisson case (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2022017

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