"Optimal Investment in Heterogeneous Capital and Technology Under Restr" by Raouf Boucekkine, Natali Hritonenko et al.
 

Title

Optimal Investment in Heterogeneous Capital and Technology Under Restricted Natural Resource

Document Type

Article

Publication Date

10-1-2014

Abstract

We consider the optimal control of nonlinear integral equations with endogenous delay and state constraints, which describe a developing economy subjected to resource constraints. The economy invests in new resource-efficient technologies, invests in new capital, and scraps obsolete capital. We derive the optimality condition and determine long-term asymptotically exponential trajectories that optimally combine scrapping the dirtiest capital and developing new clean technologies. Next, we study the short-term dynamics of the model and show that it leads to a sustainable growth with active resource constraint.

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