Optimal Investment Scheduling with Price-Sensitive Dynamic Demand

Donald Erlenkotter and Robert R. Trippi
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Donald Erlenkotter: University of California, Los Angeles
Robert R. Trippi: San Diego State University

Management Science, 1976, vol. 23, issue 1, 1-11

Abstract: A model is developed that integrates capital investment decisions with output and pricing decisions for a situation of growing demand. Conditions are derived for the model that permit application of a general approach for determining the optimal sequence and timing of investments in a continuous-time framework. The behavior of optimal pricing and output decisions is characterized analytically. Specific results are given for a quadratic cost and revenue case, and an example illustrates the form of a solution. Possible extensions of the model are also discussed.

Date: 1976
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:23:y:1976:i:1:p:1-11

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