Optimal Control of Investments in Old and New Capital Under Improving Technology
An optimal control problem for nonlinear integral equations of special kind is analyzed. It considers a firm’s investment into age-dependent capital under improving technology and limited substitutability among capital of different ages. We prove the existence of solutions and analyze their structure. It is shown that the initially bang-bang optimal investment switches to an interior one and eventually converges to a steady-state trajectory that represents balanced economic growth. The obtained analytic outcomes contribute to better understanding of investment policies under technological change.
Hritonenko, N., Kato, N., & Yatsenko, Y. (2017). Optimal Control of Investments in Old and New Capital Under Improving Technology. Retrieved from https://digitalcommons.pvamu.edu/mathematics-facpubs/12