Optimal Investment in Heterogeneous Capital and Technology Under Restricted Natural Resource
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.
Boucekkine, R., Hritonenko, N., & Yatsenko, Y. (2014). Optimal Investment in Heterogeneous Capital and Technology Under Restricted Natural Resource. Retrieved from https://digitalcommons.pvamu.edu/mathematics-facpubs/19