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OPTIMAL REGULATION OF NATURAL RESOURCES IN THE PRESENCE OF IRREVERSIBLE THRESHOLD EFFECTS
Article first published online: 28 JUN 2008
DOI: 10.1111/j.1939-7445.2003.tb00116.x
1939-7445/asset/cover.gif?v=1&s=f7e33ed8b60dee6c9259d7e5d5426fd67f27a28b "Natural Resource Modeling")
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How to Cite
NÆVDAL, E. (2003), OPTIMAL REGULATION OF NATURAL RESOURCES IN THE PRESENCE OF IRREVERSIBLE THRESHOLD EFFECTS. Natural Resource Modeling, 16: 305–333. doi: 10.1111/j.1939-7445.2003.tb00116.x
Publication History
- Issue published online: 28 JUN 2008
- Article first published online: 28 JUN 2008
- Abstract
- References
- Cited By
Keywords:
- Irreversibility;
- threshold effects;
- natural resources;
- optimal control
ABSTRACT. Thresholds are an important physical consideration in the regulation of natural resources. This paper is the first to present a complete analytical framework in which to evaluate optimal regulation of a natural resource in the presence of irreversible threshold effects. Necessary conditions are presented for optimal regulation of these problems both for when the threshold has a known location in state-space and for when the location of the threshold is unknown. In the case where the location is known, the literature is corrected on a seemingly minor technical point regarding the behavior of the co-state variables that turns out to be of considerable importance. For the case when the location of the threshold is not known, it is shown that thresholds in state-space implies a nonstandard risk structure.