Solving optimal timing problems in environmental economics

Metin Balikcioglu, Paul Fackler () and Robert Pindyck

Resource and Energy Economics, 2011, vol. 33, issue 3, 761-768

Abstract: Two papers of (Pindyck, 2000) and (Pindyck, 2002) that modeled the control of stock pollutants as optimal stopping problems contained closed form solutions that are incorrect. This paper discusses a subtle error in the derivation and demonstrates how solutions to these and related problems can be obtained numerically. The numerical solutions are contrasted with the ones contained in Pindyck's original papers.

Keywords: Environmental; policy; Uncertainty; Optimal; stopping; Irreveribilities; Climate; change (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (32)

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