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Resource Allocation When Projects Have Ranges of Increasing Returns

Catherine Bobtcheff (), Christian Gollier () and Richard Zeckhauser ()

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: A fixed budget must be allocated to a finite number of different projects with uncertain outputs. The expected marginal productivity of capital in a project first increases then decreases with the amount of capital invested. Such behavior is common when output is a probability (of escaping infection, succeeding with an R&D project…). When the total budget is below some threshold, it is invested in a single project. Above this cutoff, the share invested in a project can be discontinuous and non-monotone in the total budget. Above an upper cutoff, all projects receive more capital as the budget increases.

JEL-codes: C60 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-ppm
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Related works:
Journal Article: Resource allocation when projects have ranges of increasing returns (2008) Downloads
Journal Article: Resource allocations when projects have ranges of increasing returns (2008) Downloads
Working Paper: Resource Allocation when Projects Have Ranges of Increasing Returns (2007) Downloads
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