Optimal Regime Switching and Threshold Effects. Theory and Application to a Resource Extraction Problem under Irreversibility

Raouf Boucekkine (), Aude Pommeret () and Fabien Prieur

No 1213, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We consider a general control problem with two types of optimal regime switch. The first one concerns technological and/or institutional regimes indexed by a finite number of discrete parameter values, and the second features ecological-like regimes relying on given threshold values for given state variables. We propose a general optimal control framework allowing to derive the first-order optimality conditions and in particular to characterize the geometry of the shadow prices at optimal switching times (if any). We apply this new optimal control material to address the problem of the optimal management of natural resources under ecological irreversibility, and with the possibility to switch to a backstop technology.

Pages: 41 pages
Date: 2012-05-22
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2012_-_nr_13.pdf (application/pdf)

Related works:
Working Paper: Optimal Regime Switching and Threshold Effects: Theory and Application to a Resource Extraction Problem under Irreversibility (2012)
Working Paper: Optimal Regime Switching and Threshold Effects: Theory and Application to a Resource Extraction Problem under Irreversibility (2012)
Working Paper: Optimal regime switching and threshold effects: theory and application to a resource extraction problem under irreversibility (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1213

Access Statistics for this paper

More papers in AMSE Working Papers from Aix-Marseille School of Economics, France AMU-AMSE - 5-9 Boulevard Maurice Bourdet, CS 50498 - 13205 Marseille Cedex 1. Contact information at EDIRC.
Bibliographic data for series maintained by Gregory Cornu ().