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

Raouf Boucekkine (), Carmen Camacho (), Weihua Ruan () and Benteng Zou
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Carmen Camacho: Paris School of Economics & CNRS
Weihua Ruan: Purdue University Northwest

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

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 assumption, 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 first-order Pontryagin conditions.

Keywords: Multi-stage optimal control; Poisson process; HJB equations; irreversible pollution. (search for similar items in EconPapers)
Date: 2022
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http://hdl.handle.net/10993/51922 (application/pdf)

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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:luc:wpaper:22-10

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