Skiba points in free end-time problems

Jonathan P. Caulkins, Gustav Feichtinger, Dieter Grass, Richard F. Hartl, Peter Kort and Andrea Seidl

Journal of Economic Dynamics and Control, 2015, vol. 51, issue C, 404-419

Abstract: Since the end of the seventies Skiba points have been studied in infinite time optimal control problems with multiple steady states. At such a Skiba point the decision maker is indifferent between choosing trajectories that approach different steady states. This paper extends this theory towards free end-time optimal control problems, where the decision maker collects a salvage value at the endogenous horizon date. In particular, besides operating forever, the decision maker can choose to stop operations immediately, or to operate during a finite time interval after which the decision maker stops and collects a salvage value.

Keywords: Optimal control; Skiba point; Capital accumulation model; Free end-time problem; Takeover (search for similar items in EconPapers)
JEL-codes: C61 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:51:y:2015:i:c:p:404-419

DOI: 10.1016/j.jedc.2014.11.003

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