An optimal stopping approach to land development under uncertainty

Amitrajeet Batabyal

The Annals of Regional Science, 2000, vol. 34, issue 1, 147-156

Abstract: The Arrow-Fisher-Henry (AFH) analysis of land development under uncertainty has been conducted in a two period model. Recently, Capozza and Helsley (1990) and Batabyal (1996, 1997) have addressed the question of land development under uncertainty in a multi-period setting. We extend aspects of this literature by analyzing the multi-period land development question in an optimal stopping framework. In particular, we characterize the optimal decision rule governing the development of land, given that the objective of a landowner is to maximize the total revenue from development.

Date: 2000-03-17
Note: Received: February 1998/Accepted: October 1998
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