Optimal Investments with Increasing Returns to Scale.
The author analyzes the firm optimal investment policy, assuming a pure increasing-returns-to-scale technology and adjustment costs. The existence of an optimal plan is proved by applying a new set of necessary and sufficient conditions for optimality. The analysis is carried out in a linear-quadratic framework that enables one to study a general nonlinear problem in a neighborhood of the long-run equilibrium. The investment policy shows a reverse accelerator effect. In a general setting, he proves that the saddle-point characterization is a sufficient condition for a stationary competitive equilibrium to be a finitely optimal trajectory. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Year of publication: |
1998
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Authors: | Barucci, Emilio |
Published in: |
International Economic Review. - Department of Economics. - Vol. 39.1998, 3, p. 789-808
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Publisher: |
Department of Economics |
Saved in:
Saved in favorites
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