Optimal pattern of technology adoptions under embodiment: A multi-stage optimal control approach

Optimal pattern of technology adoptions under embodiment: A multi-stage optimal control approach

0.00 Avg rating0 Votes
Article ID: iaor201112235
Volume: 32
Issue: 5
Start Page Number: 574
End Page Number: 586
Publication Date: Sep 2011
Journal: Optimal Control Applications and Methods
Authors:
Keywords: decision theory, optimization, management
Abstract:

By deriving the necessary conditions for a multi-stage optimal control problem where the endogenous switching instants appear as an argument of the state equation, we analyze the optimal pattern of technology adoptions under embodiment with a finite planning horizon. We show that the optimal pattern of technology adoptions depends crucially on how the growth rate advantage compares to the adjustment and the obsolescence costs inherent to embodiment. We obtain non-stationary lifetimes for the adopted technologies due to finite planning horizon. We analyze numerically the effects of planning horizon, speed of adjustment to the new technology, growth rate of technology and the impatience rate on the optimal pattern.

Reviews

Required fields are marked *. Your email address will not be published.