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Computation Techniques for Intertemporal Allocation of Natural Resources
Author(s) -
Chapman Duane
Publication year - 1987
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1241314
Subject(s) - usable , discounting , monopolistic competition , computation , economics , production (economics) , mathematical optimization , expropriation , mathematical economics , computer science , microeconomics , econometrics , mathematics , finance , market economy , algorithm , world wide web , monopoly
Application of optimal control theory to applied problems is limited by the difficulty of numerical solutions. Typically, terminal values for the production period, price, or production level have been assumed rather than optimized. The use of an objective functional with explicit discounting gives direct solution values for n , y(t) , p(t) , and rent (or consumer surplus) for continuous or discrete problems. The method is usable for numerical solutions to problems with linear demand, cost trend, or expropriation risk. It is illustrated with Fisher's widely used discrete problem and with application to parameters representing remaining world oil resources for competitive and monopolistic assumptions.